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John Coleman is Managing Partner of Sovereign’s Capital. He is also a frequent writer and public speaker, with a recurring series of articles at Forbes and HBR. John previously published two books. His third book, “The HBR Guide to Crafting Your Purpose”, was published in January of 2022. John is going to be co-hosting the Faith Driven Investor Podcast. Before he does, we wanted to sit down with him and talk more about what it takes to craft your purpose.

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast, as always, I’m here with Luke. Luke, you’re calling in from Tucson, Arizona, so you’ve taken the show on the road.

Luke Roush: We haven’t been out here with Kyle Pratt and Vermeer Southwest, but it’s great to be on the show.

Henry Kaestner: That’s awesome. That’s another great Faith Driven Entrepreneur leading the business, creating making it happen. Lebanon employs Lebanon customers in a way that points to a God that loves them and loves big machines. And I’ll tell you, I love the tour that Carl is taking us on. There’s something about the little kid in me that just loves these kind of ditch digger type of big machinery. I got in the cockpit of one of those front end loaders. I felt like at five years old again, it was time. Travel was awesome.

Luke Roush: That’s why I’m here basically for that feeling yet again.

Henry Kaestner: Yeah, yeah, that’s super cool. So today is a special edition of the podcast because we are introducing the world to our great friend and partner John Coleman and John is such an encouragement to us personally. And then, of course, professionally. And John is joining the podcasting team, and he’s going to be taking over as co-host. And many times he’s going to be the lead host. And one of the things that you always want to do whenever you’re involved in a project is to bring other people on board that are better than you are at whatever the task is that you’re accomplishing. And this sounds like false modesty. And maybe you thinking, maybe it’s not. Maybe you think it’s actually a really low bar, and it probably is that, but John is a guy who really gets the space around and understands it at heart level. He, of course, is a committed follower of Christ. And it’s just really encouraging for me. And maybe, Luke, you’re speaking this a little bit too. But you know, when you have had your hand at the plow for a long time, as we have with sovereigns and then Faith Driven Investor, when somebody that has John’s type of background and has been doing investments at such scale but says, you know, gosh, what you’re doing is really important and kind of the zenith of his career, he comes over into what you’re doing. That’s amazingly encouraging.

Luke Roush: It is, indeed. You know, and I think the movement that we’re all part of that all of our listeners are a part of is increasingly able to recruit, retain and excite some really world class folks from secular asset management firms that I think feel a sense of calling and purpose in mission to do something more. And there’s certainly, I think, a lot of asset managers, a lot of advisors, a lot of other players in this space that are increasingly developing products that are interesting and sort of worthy of pulling a broader group of folks over. And like you, Jon also has a face made for radio and voice made for print journalism, so we’re excited about that.

Henry Kaestner: Well, yes, true about me, very much not true about Typekit. We’ve already established that going to need to do some sort of a video release you get, I think, the best beard in the feature of an investment labar LaVar. Maybe also a low bar, I don’t know. But you know, the other thing that gets me excited about Jon is that there are some number of national champions in the mix of what’s going on in the Faith Driven Investor ecosystem. I immediately am thinking about Geoff Johns, who went to Duke University, where he was a national champion skydiver. Most people don’t know about that.

Luke Roush: Yeah, I mean, that’s a good bar bet. What was Geoff Johns, national champion at No. One, when the bar would guess sky diving? I don’t think

Henry Kaestner: I mean, I think, well, it’s going to be a good test of whether people are listening to Faith Driven Investor Praxis. Yeah. So he was a national champion skydiver, which I think is just crazy, crazy, cool. He, of course, for those of our listeners who do not know, co-founded the Impact Foundation with Amy Minnick, which is an incredible organization that helps people to invest their philanthropic capital. So I think if you’re donor advised, fund money, your foundation money supporting ERG money, that money might do an incredible amount of good for God through investing. In some cases, the causes that have got is put on your heart to give money to. In some cases, you may go pretty far by investing, and most people don’t know you can do that with your philanthropic capital as what Jeff does or what you mean and they’re expanding can do remarkably well. It impact foundation and he, as you now know, is a national champion. But John Coleman, also a national champion and something that’s a little bit more germane to what we’re talking about right now, and that is he was a national champion in debate. Am I getting this right, John? By the way, China is, we’re putting you on the spot with this kind of awkward question. Maybe it’s not that awkward, dude. You’re a national champion. That’s incredibly cool. Welcome to the show. Welcome to the program. Welcome to the ministry. You’ve always been a part of it, but we’re this is your coming out party.

Speaker 3: Oh, I’ll thank you all. Look, I was going to say thanks for the kind words until Luke jumped in with the face made for radio comment partner, so on. But you guys know I’m just so humbled and honored and grateful to be working with folks like you and the rest of the team at sovereigns and the folks at Faith Driven Investor and just really excited about the mission that we’re on together. So I feel remarkably privileged to be in this position and working with the all. So. Thank you for having me on the show today as well.

Henry Kaestner: Yes, yes, OK, pleasantries aside, national champion yes or no? Tell us about it.

John Coleman: Wasn’t debate actually. So debate is more for people who are willing to respond to others. I was a speech national champion, which meant I just got to monologue for ten minutes without anyone responding, which is, as Luke knows how I prefer it these days as well.

Henry Kaestner: Oh, that’s awesome.

Luke Roush: That’s all that sounds like a good podcast host.

John Coleman: As long as you don’t challenge anything. I say Luke. Yes.

Henry Kaestner: And so as Luke and I like to do with every one of our guests, we try to get an autobiographical flyover. So who are you where you come from? What motivates you? We’ve got a whole bunch of different questions. You are a investor. You’re a family man, you’re an author. We’re going to get to all of these things. But tell us about where you come from.

John Coleman: Yeah, gosh. So I grew up in Georgia and Florida. I was actually born in Florida while my dad was at the University of Florida, getting his college degree. He was a rodeo cowboy at the time, although my mom made him retire from that profession when I was born and had a great upbringing, lived in the Panhandle for a little while, which is where my dad’s family is from. Grew up mostly in Columbus, Georgia, which is about two hours south of Atlanta, and my mom’s family’s from all over Georgia and most exciting Vidalia, Georgia, known for its sweet onions, which hopefully people have had and, you know, had a great upbringing. There grew up in a Christian family and so was always raised around Christian principles. Like a lot of kids, I had my own ups and downs in my faith, you know, as I went away to college and those sorts of things, but never really found myself very far from it. You know, there were points in time where it differed a bit, but I got to go to a Christian high school. You know, it was really brought up around the habits of the Christian faith. And so a wonderful foundation there that I can thank my family for and my community for. After school, I really had no idea what I was going to do. I should have a better story about my lifelong calling to be an ambassador here, but I actually thought I might be a journalist or a think tank person or a professor and stumbled into my first real job after college. I was desperate for a job. I was ending a summer job and needed an apartment in like two weeks. I was losing the apartment they had provided. And so I took the first job that was offered to me as I interviewed, which was as a quantitative energy trader at a little hedge fund up in the D.C. area. It took me about a week to learn that I was the world’s worst quantitative energy trader. It fortunately took my firm a little bit longer than that, so I had some time to prepare. But, you know, I was then able to know to explore a bunch of different stuff for my career. I spent some time at McKinsey and Company. I did some graduate studies in both public policy and business and then spent about nine years at a firm called Invesco that did diversified money management globally before coming to sovereigns. In the midst of all that, I managed to meet a lovely woman who became my wife, Jackie Coleman. She has traditionally been in education and counseling. She was actually a marriage counselor when we were dating, which led to the most stressful application process of my life, which was to be Jackie’s husband as she was grading all my, all my tests that she put me through as we were thinking about getting engaged. And and yeah, we’ve had four kids over the last nine years, so we have four little kids. We love to write. We love the outdoors. We love to travel. We actually just got back from Israel yesterday, my first trip to Israel, which was really life changing, and we have a great life. And then I was fortunate enough to run into Luke a few years ago, and he didn’t scare me off before I met you, Henry, which is the good news. And reconnected with you guys a couple of years ago and was just really, really fortunate that you all invited me to join the sovereign’s team about 13 months ago, now last February. And I am just so grateful for that and have had a blast so far

Henry Kaestner: was a no brainer. And I’ll speak for Luke. Absolutely some number of people that listeners may not be familiar with Invesco big institutional player. Tell us a little bit about what Invesco does and then the role that you played there.

John Coleman: Yeah, I had a few different jobs there, so Invesco is about a one point three or four trillion dollar asset manager globally. They manage about that much in assets, and they do basically everything from kind of ETF and index provision on one side, as the S&P 500, they have the QQQ. So if you’ve been watching the NCAA tournament, you know the Nasdaq QQQ all the way over to actively managed mutual funds, fixed income and then into private markets. So things like direct real estate and private equity and fund of funds and venture and those sorts of things. So really, a full spectrum investment manager, I have. A few jobs over the course of time while I was there, I was our head of strategy for a while globally. Worked a little bit on our digital businesses, things like robo advice, et cetera. And some of the acquisitions that we did as a firm and then really ended my time there working in two areas. One was our global institutional client business where I was a member of that kind of operating committee there. We managed about $360 billion for institutions around the world, things like sovereign wealth funds or insurance companies. And then on the other side of the house simultaneously held a job in private markets, helping build out our capability in real estate, private equity, private credit, etc., including running our fund of funds in secondary capability there for a while. So I had a great, diverse experience. There is a big global firm, so I learned about all elements of the business, which was incredibly helpful and it was a great platform. I think for the work we’re doing now, just giving me a good understanding of that marketplace.

Luke Roush: So John, on the one hand, you know, having a job like that with a firm like that would seem to be, that’s kind of what everybody aspires to, right? That’s kind of the goal. That’s the end game. What led you to feel as though you really wanted to be doing something different? Maybe share a bit about that.

John Coleman: Yeah, yeah, absolutely. So it was a great firm and really appreciated my colleagues there, you know, at this stage of my career. There are a few things driving my professional decisions. One was will come to it in a little bit. In 2019, I actually started writing a book on purpose for Harvard Business Review. And in the midst of writing that COVID hit and was thinking about career things, and it really convicted me about just making sure that at this point in my career, I was really aligning my personal values and my sense of mission and my purpose with an organization in a deeper way. To be honest, before I started talking to you all, I didn’t know that I could have the kind of integration that I have now with my faith and with investing, you know, that seemed like a pipe dream. I thought I might have to go to a nonprofit or something like that, and at the intersection of those two wasn’t. I wasn’t able to do that right until I found y’all. And I also had this belief that I wanted to go out and help build something to join a smaller firm where I could be a part of the team that was really helping to grow and build it. And again, you know, the path to sovereigns was even greater than I expected because we’re not just building a firm, I think we’re trying to build an entire type of investing in and we have a mission that’s broader than us in a movement. And so, you know, those two things coming together with the idea, you know, I’m a little bit further along in my career now. I know how important it is to just love the people you work with every day and to be excited every morning to get up and work with the people you want to work with. And you know, the mission alongside the opportunity to build along with working with the best people that I could possibly hope for, really created just the perfect situation for me to want to come over.

Luke Roush: One of the things that I think you’ve pushed us on and stepping back actually from sovereigns, I think you’re starting to push a broader dialog around. Is this idea that as investors, we aren’t in a kind of values neutral arena, that’s not the space that the world pushes us into. Would you mind just sharing a bit on this construct that all investing is impact investing, which I’ve heard you give that talk? Others who are listening to the show probably heard you give that talk, but maybe just unpack that a bit.

John Coleman: Yeah. You know, I think in popular language right now, a lot of people think of the term impact investing as concessionary investing, right? It’s where you have a mission and you’re trying to accomplish that mission with your money, but you might be willing to sacrifice return in pursuit of that mission. My belief if you look at the mainstream world of ESG investing, environmental social governance investing, which is now sweeping the world, is in fact that all of your investment dollars already have an impact. There’s really no neutral portfolio, right? And this has been true throughout history, but I think people are becoming more aware of it. Every dollar you put to work has an impact for good or for bad. And the only question is whether you’re going to direct that impact or you’re going to leave it to chance or you’re going to allow another institution to have that impact on your behalf. You know, what’s interesting is I think the mainstream investment management world has realized this in really dramatic fashion recently, and it’s actually the faith aligned investment ecosystem, particularly the Christian investment ecosystem that has been a little slow to come around to this. So some of the statistics I like to throw out there, Luke, you know, if you look at managed assets in the world in 2020, there were about one hundred and three trillion dollars in managed assets around the world. Now that’s probably north of there. I guess it’s somewhere around 120 trillion or something like that. Fully a third of those assets. So thirty five trillion were in explicitly ESG, environmental social governance investment strategies in 2020. So fully a third of the managed assets in the world. We’re explicitly targeting impact of some sort. And I would argue that even outside of that, that other 60 trillion in assets was similarly having an impact. So if you dig into what makes an explicit environmental, social and governance strategy that can be things like carbon neutrality, it can be negative screening like keeping fossil fuels out of your portfolio or positive screening, like supporting renewable energies on the environmental side. On the social side, it can be things like pursuing diversity and inclusion in your company or diverse boards of directors, or it can be excluding companies based on human rights issues in the mainstream ESG world. And then on the governance side, it can be diversity in the executive suite. It can be incentive systems, et cetera. But those are explicit strategies that has really blown up, and there are a number of approaches to that now around the world. And so you get this $35 billion, everything from basic negative screening to positive screening for the types of companies you want to invest in somatic investing where you say this is a renewable energy fund or this is a fund that focuses on carbon neutral companies all the way up, then to activism right or control like you would see in private equity. And so this ESG ecosystem in the mainstream world has really flourished. And as you dig into that, you know, a lot of your institutions on the Christian side, they would agree with some of those things, right? I think very few of us don’t want a great environment, right? We may have different approaches to that, but that’s what we want. But be there may be unaware actually of how they’re having an impact. And I won’t drone on about this too much. But if you look even at the rest of managed assets, you know, think about passive investing like your ETF or index exposure. A lot of people view that as neutral. I’m in the S&P 500. But if you dig under that and look at what constitutes that, you know, the top 10 investment managers in the world control 30 percent of the S&P 500. So there are 10 investment managers that control a third of the biggest publicly traded companies in the world. And if you look at the big three, which are BlackRock, Vanguard and State Street, which control most of the big passive holdings, they’re around eight point eight percent of each S&P 500 company in the country, and they’re the largest shareholder, taken together of 88 percent of the S&P 500. And if you look even beyond their ESG, what they’re doing with that is they’re using their proxies to vote, they’re issuing corporate resolutions, they’re pressuring companies to do things. And so I encourage people to unpack their portfolios and they’ll see even if they think they’re not really doing anything. For the most part, all of us are having some impact with our portfolio now, an explicit ESG strategies or other strategies. We often just don’t realize it.

Luke Roush: So one follow up on that, John, a lot of our listeners and I would put myself in this camp up until, you know, only a few years ago would think that whether it’s a public company or whether it’s a privately held company of really any size it, what can I do right? Like how much am I really going to hold? Am I really able to kind of have my voice be heard? Maybe just kind of unpack, because there are a couple of noteworthy examples recently of relatively small stakes swinging a big stick within large companies. Any comments you’d make on that?

John Coleman: Yeah, you know, I do think it’s overwhelming to kind of look at BlackRock, State Street, Vanguard, these multitrillion dollar companies, Invesco and say, of course, they can have influence, but like, what influence can I have? But I think one of the most remarkable things about public and private markets is that with a relatively small pool of capital, you can have a massive impact to sort of the public company side because that’s the hardest to get your mind around. When you buy a company in private markets, you kind of get that you can have influence on that company. But public markets, it seems like I’ve got to move billions and billions of dollars to have an impact. There was a great example recently of a group called Engine Number One, which is a hedge fund effectively located on the West Coast. That hedge fund is around the size of Sovereign’s Capital, the firm that you two founded, and that I’m happy to join today and with a $58 million investment point zero two percent of its shares. They invested in ExxonMobil and were effectively able to get three board seats at Exxon to try and push a more radically pro-environmental policy within that group. So 0.02 percent of shares if memory serves. And yet, because they were able to lobby a number of passive holders to vote with them, they issued a series of corporate resolutions. They were able to lobby for board seats and they were able to effectively take over not majority control of the board, but a substantial plurality of the board to try and enact this new, more radically pro-environmental set of policies at Exxon. And so that’s an example of what in the grand scheme of things is a very small asset manager and activist hedge fund that was able through a pro-environmental activist hedge fund that was able to take over one of the. Largest energy companies in history and really dramatically change its policies. And then on the private side, look, I think it’s something you and I see every day, right, which is when you own 10 or 20 percent of a company which Elon Musk now does of Twitter, which we could get into, I guess, at some point. But in the private sphere, or if you’ve taken a majority, you get a board seat, you may even have control of the board. You’ve got a close relationship with the CEO of that company or the founder, and you really have an opportunity to shape it. And, you know, in the context of the sovereign’s portfolio, what that means is we want to demonstrate love of God and love of neighbor through everything that we do to lead to human flourishing. And so that’s hopefully employee friendly policies is building an inspirational company with a real vision for the world, and it can be different from a culture perspective. And so I think it’s easier to look at the big numbers and get a little pessimistic about your ability to have an impact. But once you unpack those both in private and public companies, there’s just a remarkable opportunity to have an impact.

Henry Kaestner: So I want to impact that a little bit more with sovereigns. So if people are following along right now, they may or may not know a lot about. One of the things that there probably are pretty sure of is that it doesn’t have one point three or one point four trillion dollars of assets under management. So you’re going from running strategy and one firm with a lot to something that has something much less. And yet there must be some sort of working theory of change and impact that you see at sovereigns. You hinted at it there in just a little bit ago. But just unpack it more. What do you see as the future of Christian led companies and the ability for investors to come alongside them? Why is this something whose time has come?

John Coleman: Yeah. Henry, you’re great about reminding us that the two greatest commandments are love god and love your neighbor. Right? And Jesus reminded us, Well, Jesus first reminded us of that. I guess in the new you provide, it’s somewhat, Jesus said. But you know, and then he elaborates that everyone’s your neighbor, right? There is no one who’s left out of that. And I think that is actually a really inspirational vision for the impact that investment dollars can have. Because ultimately, what are you investing in? You’re investing in people and leaders, in the employees of companies and the customers that they serve and the vendors that they serve. And I think we live in an environment now where too often those relationships are transactional or they’re not founded on any sort of values or morals. And so they lead to environments like we’re seeing now with the great resignation where, you know, I write a lot on purpose, which will come to you. Some surveys indicate that only around 15 percent of people one five percent of people globally are engaged in their work. And that’s because companies and employees have chartered a mission or a culture that they feel is compelling. That’s bigger than them. I think his Christian investors, you know, the message of the gospel is good news. It’s good news. And I think our responsibility is to try and translate that good news into the way that companies work right in the way that companies live out their mission and values. They had the good fortune of sitting down recently with a guy named Michael Eisenberg, who I know has been on the podcast before an extraordinary investor in Israel, a person of Jewish faith, a really sincere Jewish faith. And you know, he was postulating that capitalism, which I think we all believe in here really was difficult to have exists in a flourishing way outside of the context of a deeply value centered society. And some might even say something like a Judeo-Christian society, although there are other sources values that those values really anchor society so that capitalism can flourish within it, and capitalism without those aspects can actually become a very transactional thing and can become something that takes advantage of people if you’re not careful. And I think what we would hope to chart is a philosophy of investing at sovereigns, whether through public markets or fund of funds. Invest in your private equity or venture where we can partner with founders who are sincere in their faith and companies that are sincere in their faith to create better environments for employees and companies that charter a bigger vision for the world.

Henry Kaestner: Indeed, bringing about God’s kingdom on Earth as it is in heaven while bearing witness to the king and just fired up to have you on board and running the firm with Luke on that. One of the other things that, of course, Solomon’s gets his opportunity to do is to come alongside men and women who are running in leading companies and helping them to borrow a term craft their purpose. And when I think about somebody who might know something about that, I go back to see if somebody might have written a book on it. Indeed, as it turns out, you have talked to us about the concept of helping somebody to craft their purpose. And this book that you’ve brought out with the Harvard Business Review.

John Coleman: Well, this all dates back. You know, you and Luke are athletic guys, Henry. I know your your family’s got a great one of

Henry Kaestner: us, more so than the other. Like, like the audience. Try to figure that out by Googling Luke Roush is 40 time.

John Coleman: Yeah, it was, you know, I think he said it was like a four. One or three, nine or something, Henry, these

Luke Roush: stories, it’s like it’s like fish stories, they just get better over time. I’m going to let Henry be my publicist. I might get drafted this year of Henry, where my agent

Henry Kaestner: yelled, I saw Terrell Owens this morning. Terrell Owens, at age 48, is going to come back at us as if Tom Brady can do it. I can do it. That means that, Luke, I think Terrell Owens is older than Luke.

John Coleman: Luke, you got your chance here.

Luke Roush: Most people, I can’t remember how old I am.

John Coleman: I heard he might be signing a contract with the Dolphins, so we’ll keep an eye on that. You know, when, when instead of sports, he were good at speech in college, you have to find nerdy hobbies. And so my hobby since I was a kid is writing. I love to write, I love to communicate. And so it’s been something I do in my spare time. My first book was actually a Christian book that I wrote in my early 20s.

Luke Roush: Well, tell us about that book before you get into the other book. Tell us about that book.

John Coleman: Well, again, the intersection of Chip Ingram.

Henry Kaestner: I think about it right now.

John Coleman: I wish, I wish. It is a book called How to Argue Like Jesus from crossword books and a friend and I, Joe Carter, who I had actually met online. This is the golden age of the blog and I had met online. We’re both really interested in this idea of rhetoric and Jesus in the New Testament. And so we we talked about the intersection of kind of an Aristotelian model of rhetoric in the New Testament. The way that Jesus communicated is you might know just from the fact that probably no one listening to this has actually read the book. It did not sound like a purpose-driven life. And so that set me off on my career journey. I had to keep my day job. But, you know, it kept me writing in about 10 years ago. I developed a relationship with a publisher called Harvard Business Review, and I was in school at the time at HBS in 2009. Actually, when we wrote our first book with them, we published a book on next generation leadership called Passion and Purpose. And that started me on this topic of purpose first as an investigation. And then secondly, writing with HPR. And they were really kind to kind of let me partner with an editor there. I’d write maybe five or six articles a year for NPR online, all about leadership and personal development, professional development. They’re extraordinary at those topics. And in 2015 or so, I started writing about what I thought of as kind of a new way of thinking about purpose. Right? The idea that you don’t find your purpose, you build it or you craft it, that it’s not some pot of gold at the end of the rainbow that you wait for, but it’s something that exists in all parts of your life that you need to take responsibility for. Those articles became really popular. And so as I was talking to my editors about writing another book, they asked if I’d flesh those out into what became a book called the HPR Guide to Crafting Your Purpose. So if you’ve been through the airport and you’ve seen the little guides that HPR puts out, it’s one of those in the whole book is kind of a practical approach to how people who aren’t getting a great enough sense of meaning in their personal and professional lives can rethink the way that they view purpose and begin to craft it more in their lives and live more fulfilling lives, both both at work and away from work.

Luke Roush: What I love about the book I love a lot of things about the book, but I love the fact that it moves from being sort of this like passive. While I hope I find it someday to being an active kind of shaping, reshaping and a continual discovery. We talk a little bit about it being actively faithful versus willful in that movement to more of kind of an activity that individuals and leaders are engaging in. I think was really impactful for me as I went through the book.

John Coleman: You know, that’s at the core of it, Luke, is to help people restore a sense of agency. You know, I think it is easy these days, especially you work in a big corporation or you’re in a country where you don’t feel in control and you can lose a sense of agency. The idea that you actually do have some say in the way that your life turns out that you do have some control over it. Not in a negative, prideful sense, but in the sense that you can take actions that can improve your life in the way that you experience life. And obviously, as a Christian, I believe that every single life has extraordinary value. Right? We are all created in God’s image. We’re endowed with this dignity as a result that everyone has, that they have a purpose and a mission for their life. And I think unfortunately, through popular culture, we have been induced to believe that purpose is a thing that you find that it’s passive. Right? It’s I think of it as like the Hollywood version of purpose, which is actually kind of romantic when you see it in a movie, the kind of destructive when you’re trying to incorporate it in your life. And what I mean by that is there’s this great Mark Twain quote that’s attributed to him. I don’t think it’s actually his quote that the two greatest days in your life are the day you’re born. In the day you find out why. Right? And you’re like, Oh, that’s really romantic. But on the other side, it induces a ton of angst, right? Because you’re just waiting for that one day to find out why you were born. Right? We can talk about there’s a faith interpretation of that. That’s different, but that’s not what Twain is talking about, I think. And you see the movies, right? It’s Luke Skywalker kind of live in a boring life until he finds out he’s a Jedi or neo living in The Matrix in. It’s disrupted and, you know, a purpose falls in his lap. And so there are all these people out there looking for that one thing to fall in their lap to change their lives. But in doing so, they’re getting a lot of angst about finding that one thing. And so instead, you know, the core of my message is threefold. One is purpose isn’t a thing that you find. It’s something you built, right, that you have agents and you have control. Purpose exists all around you. It’s up to us to take control of that and build a life that’s meaningful. The second is that purpose isn’t singular that one thing you’re waiting for, but plural. Right? Most of the people have a lot of angst about their purpose, already have a lot of purpose in their lives. They’re just not seeing it right. It’s your kids. It’s your family, it’s your wife, it’s your friends, it’s your community. It’s the homeless shelter down the street that you serve soup in. It’s your hobbies. It’s all this beautiful stuff in your life that if you’re too anxious about your professional purpose, you can lose sight of and even in your profession, it can be multiple things like relationships with colleagues, etc. So it’s plural. And in the final myth I deconstruct is this idea that purpose is a single thing, you know the two greatest days in your life for the day you’re born. In the day, you find out why. It’s like one thing that will change your life forever. And instead, I think that purpose changes over time. Right? Our purpose is a high schooler or as a college student. It’s different than when we’re young professional. It’s different than when we have a family. It’s different than when you retire and move into our second mountain, as David Brooks describes it. And then instead of feeling anxious about that or like, we’ve wasted time that we would just embrace those shifts of purpose. And so really, in those three ways, I encourage people to fundamentally rethink the way that they view meaning and to embrace their agency in terms of how to achieve that.

Henry Kaestner: John talked to us about the role that we, as investors, can play in helping entrepreneurs craft their purpose and just in different leaders in the marketplace. What’s that dynamic so that we can get involved earlier on in a Luke Skywalker career and earlier on and working with Keanu Reeves? Just refine it a bit more.

John Coleman: Oh gosh, I’m the new kid on the block, so I hope you too will chime in. You’ve been at this even longer than I have, and you’re extraordinary at it. Henry, you might even say that you wrote the book on this, so I hope you’ll all weigh in as well.

Henry Kaestner: You know, I would look for riding the Ford. No, but we collectively wrote the book. And by collectively, I mean, there are lots and lots of people in this movement that and I think about Chip Ingram, I think about Tim Keller, I think about Andy Crouch, Dave Blanchard there. A whole bunch of different people who are really fired up about this concept of what is cultural change look like in our entrepreneurs. Indeed, the tipping point the point end of cultural transformation in the marketplace was that look like and I may be one of very many authors in that collaborative book, but this is a movement. Aslan is on the move. A whole bunch of people are waking up to this. You did so much so that you left this incredible job in Invesco. But what role does an investor and whether they invest in a firm like a faith driven investment fund or they do individual angel investing? What is the call to working with these entrepreneurs and leaders?

John Coleman: Yeah, I see it a couple of ways. And look, I’d actually love to hear you riff on this a little bit, too. One is, as you said, to help encourage an entrepreneur, you know, be an entrepreneur or a CEO is a remarkably stressful job. It is a remarkably stressful job. There are a ton of constraints on your time. You’re responsible for a lot. The world moves quickly, you’re working very hard, and it is easy to get sucked in to this idea that your identity is your job and that you either fail or succeed as a person based on the success of your job. You know, in the book, I talk about this in the context of one reason it’s important not to have your purpose be a single thing is because when that single thing falls apart, your company fails. You lose your job, you lose even a relationship. Your whole identity fails if it’s not anchored in something broader. And I think in the Christian context, what you articulated, Henry, you know, the one thing we can be certain of is that the thing that won’t fail is our identity in Christ. And so that is probably the one thing that you can anchor to that can be certain won’t fail. And then that can exhibit itself in multiple ways. And so I think helping entrepreneurs to anchor themselves in that identity and the dignity that they have in Christ. And then is an outflowing of that in this idea that they are whole people, right, that they have families, that they should have families, that they have a faith, that they have communities that they’re investing in and that their entire identity doesn’t rise and fall based on the company. The second is that they can shape the values of the company in a way that they know to be true aligned with their values. I think many people feel very shy about that, bringing their personal values and morals to work. And I think instead, it can be the good news of shaping a company. And then third is encouraging those folks then to take that seriously enough to help the individuals within that company also craft their own purposes, also find their own identities. And also live more full lives, just as the investors are encouraging the entrepreneurs or CEOs, and so it had this ripple effect where if the CEO or the founder of the entrepreneur is that way and can help everyone within the company live that way, you know, they’re then a witness to everyone else that they come into contact with and you can impact thousands of lives.

Henry Kaestner: So, John, one of the things that we do in all of our podcasts, of course, is to point people back, just as you are doing with these entrepreneurs to God’s work, believing that the Bible is alive, God speaks to us through it, and it doesn’t necessarily need to be something this morning, but maybe something recently about something you’ve read through God’s word that has really impacted you and that you might offer up as an encouragement to others that might also continue to seek out God through time and scripture as well.

John Coleman: Yeah. So one of my favorite verses that I encountered again the other day is quite a popular one, so I won’t claim points for originality. But it’s Micah six eight where God commands us to do justice, to love mercy and to walk humbly with God. And I think what’s convicting about that for me is there are so many ways to overcomplicate our faith and our Christian walk, right? And it’s such a simple command which is just to do the right thing to love mercy, not just practice mercy, but love mercy, to feel joy in giving mercy to others and to receiving mercy and to walk humbly with God, right, which is to submit yourself to him and follow him. I felt that acutely when we were visiting the garden to get Simone, where Jesus submitted himself to God’s plan and humility and to think, Oh my gosh, how much easier for me to see myself in humility than it was for him the burden that he was taking on. And so that verse has really resonated with me lately just because of its simplicity in kind of giving a command for how I should live my life. That can be incredibly practical. It’s the way that I deal with myself and others.

Henry Kaestner: Yes, no points for originality. I’m glad you didn’t go with John 3:16, although John three six. Amazing, but you did a great job. You did a great job of unpacking Michael six eight. And that is really cool, and I’ll jump on your bandwagon. There is something really special about going on to the Holy Land, and it shouldn’t be a requirement because I know their faith traditions might have is a requirement. And yet you kind of understand and appreciate why they might. There’s something really special about being where these different stories that we read about goes by will actually happen, and I think that God speak to us through his word. I’ll never forget reading the Beatitudes with my father overlooking the Sea of Galilee from this sermon on the Mount from the Mount. Yes, thank you for sharing. It’s awesome to have you with us. I’m so excited about your leadership and hosting on FDE. I am grateful that we gave our audience a chance to learn a bit about you. And God bless you, brother.

John Coleman: Thank you all very much. Great to see all today.

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Neil Holzapfel started investing in public companies in Africa and the Middle East. And yet, his heart was for more. He co-founded Raise the Children, a non-profit unlocking the potential of South African orphans to become servant leaders by investing in high quality secondary education and mentorship. Neil joins us today to talk about investing and creating from a place of pain, his journey as an investor and why he and his wife are so passionate about education and mentorship. 

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast. I’m here with my co-host, John Coleman. John, good morning, Henry.

John Coleman: Good morning to you.

Henry Kaestner: Indeed, although as I look at it is afternoon for you and as evening at night for our guests. Today, we’ve got a real special podcast and as we’re getting ready and we’re talking kind of quote on quote backstage, I was talking about this guy that I love like a brother and I really do, and he’s the real deal. He’s been encouragement to me. He’s challenged me appropriately in the past, so I’ve known him for maybe a dozen years and just really helped strengthen my commitment and resolve to knowing Jesus. And he’s been living this incredible life that he’s going to tell us a bit about. And my hope today, John, is that we might give our audience a different perspective and a different viewpoint that helps them understand what it looks like to invest in Africa. Our time, our experience, and yes, of course, the capital that God has entrust us with. So I’m fired up.

John Coleman: Yeah, it’s such a such a remarkable topic. I mean, the ability to impact a billion people. I know this is something you’ve gotten really fired up about recently too, right? Henry Yeah, it is.

Henry Kaestner: It is. We had gas. I guess we’ve gone now to Africa four times over the last two years. I mean, even with COVID and we had our Faith Driven Investor Conference Mini conference in Nairobi, we’re going to go back in September for the Faith Driven Entrepreneur and Investor Conference in Africa. God is doing incredible things there. I’m personally compelled. We’ve done so much. Of course, John, you and I know Southeast Asia so well and we’ll continue to love Indonesia and Singapore. And yet there is something about the continent of Africa and just the demographics and how young the population is. The joyfulness that comes from meeting, maybe that’s the selfish thing for me. I just and we’re going to get to the media podcast in a second, but there’s some amount of selfishness that I have. I want to know God, I want to know your own experiences, joy. And when I spend time on the ground in Africa with my African brothers and sisters, I see the joy of knowing God. And for them, the Holy Spirit is a very real active thing. Jesus is somebody who can be known and celebrated and loved and be loved by. And I just get really excited and every time I’m there, so we want to do more of that. No better person to help us on a tour of Africa than somebody who’s given his life to the continent. Neil, welcome to the program.

Neil Holzapfel: Thanks, Henry. And you’re far too kind, but it’s great. Great to be here. Thank you. Henry and John,

Henry Kaestner: excited to have you.

Neil Holzapfel: I think about Africa. And yeah,

Henry Kaestner: I think back to the time when I first met you, you know, we don’t do this on video, but I remember. And I think there’s a metaphor in here somewhere. But I remember when I met you is at the UK. Prayer breakfast is probably 12 years ago, so it was at the House of Lords and it was just a really kind of a buttoned up affair and it’s a little bit stuffy. And Byron Laughlin, our mutual friend, took us out for lunch afterwards. Maybe I met you before I came here, but I remember this time. I remember that you’re like, You know what? This is just too stuffy and you, you know, because we’d been at this really nice thing, kind of a suit and tie type of thing. You stripped down to a t shirt right there at lunch, and I’m like, I like this guy. This guy’s is like, all pretenses aside, let’s be real with one another. And that started our friendship, and I’m grateful for it. So one of the things we like to do, or the thing we like to do with all of our guests on the podcast is understand who they are and get an autobiographical flyover. How did you come to know Jesus? How did you come to the vocation you found yourself? And how did you come to investments? You’ve got a great story, and I’m hoping you’re going to just share with us. Bring it.

Neil Holzapfel: So I’ll start with some of the high level, right? Neil’s my name. I’m from New Hampshire. Born in the Boston area, St. Thomas grew up in New Hampshire and then went to school in Boston, in the UK.

Henry Kaestner: And oh, I need more than that. We need more than that.

Neil Holzapfel: No, no, no. I’m a bring it. OK. Right now, I’m married to a woman who’s just completely shaped and changed my life so dramatically. Less so. We live in Cape Town. We have three sons Bonilla, Joel and Pascal, and we’ve been based here in South Africa for a decade this year, actually, and just celebrated our 12 year anniversary. We spent a couple of years in New York and then a bit of time in London, but been based here since then. And you know, my story, Henry is, you know, really starts with my father because my father was abandoned by his alcoholic dad when he was a child and grew up in an abusive single-parent home in a housing project in East Cambridge, Massachusetts. And, you know, the 70s were a bit dazed and confused for my parents. Well, they had me and my sister smoke. A lot of pot, drank a lot of beer and used, you know? Recreational drugs, but it was in the brokenness of their own marriage and their divorce and splitting up that, remarkably, my dad, someone gave him a Bible at work and told them that Jesus offers hope, forgiveness and new life. And he grabbed a hold of that for two years, wrote my mom in to the church. She had a Pauline conversion experience. And, you know, very much road to Damascus type ended up in church for the first time, and who knows how long they had both spent time around a Catholic church when they were young, but they were at a Pentecostal church and at that service. My mom didn’t remember anything that the pastor said. Except if you think you’ve done things you’ll never be forgiven for. I’m here to tell you, Jesus will forgive you for it. And she couldn’t help thinking about the first child that she aborted against my dad’s well before they got married. And so that was about 1983, so I went from having a pretty traumatic first six years with deep trauma. Then I’m still working through now in some ways to seeing my parents come to faith. And yet never really kind of breakthrough into for healing. So my dad is now and as you know, Henry said, I stripped down to my T-shirt, I’m stripping down here about my dad, who’s 73 this year, will start drinking today at probably noon beer go to hard alcohol in the evening. And he smokes pot all day and he’s on to prescription opioids. That’s today. Wow. So he had about a 10 year run of trying to follow Jesus and stay in community, but could never really break free of his past and the trauma of his past, his orphan spirit. And then my mom has stuck with Jesus. She’s really clung to Jesus and been the emotional and spiritual center of my family. And after my sister and I and they came to faith, they had three more children with his five kids. And now, I think, 17 nieces and nephews. But I think in my own journey as a young man, one of the big questions for me has been What if a man, a godly man, had stood in the gap for my dad when he was a boy who had no man in his life? No uncles did it, no coaches did it. You know, he went to Catholic school with nuns who beat him up. So how would his life have changed if someone had stood in the gap for him? And I think that’s been one of my big questions. So a lot of the drive. And part of my own journey is this passion for boys mainly and girls and young men and young women that don’t have fathers. And that comes through in. I work with raised the children and elsewhere. And as you know, where some people might know, South Africa in particular has been in the middle of an orphan crisis for the better part of the last 15 years, given what’s happened with HIV and AIDS. But the other thread to jump into a bit now is just what my experience of my dad and my mom and my birth family has meant for my own family and my own journey. Because I think for much of my adult life, I have been energized by the trauma and the suffering in my family, but also the joy and the strength and the loyalty and commitment that we share as a birth family. But also, you know, having to as a married Lazaro when we started our own family, really having to own some stuff and grow and understanding who I really am and who my real father really is, how Jesus brings me into a family with a perfect father who loves me and says, I’m worth it because he says so. Period. So that that’s that’s one way to kick off. Get right into it, I hope.

Henry Kaestner: No, that’s beautiful. And that’s what I was looking for. And that’s a perfect descriptor and the encouragement that we all need to hear the beauty out of brokenness and hope. And Heavenly Father right now, just all of our hearts are broken for Neil’s dad, and we just asked that you’d hear him. You were the god of healing and the God of miracles. And so we ask that you bring him back in and just be the father for him, as you are for all of us, the wonderful and infinite love. And he’d feel that today and pray for that Jesus, his name. There’s nothing better about the background of your story than that message. And yet there’s also some interesting aspects to when you get somebody comes out of that type of a background. You ended up a capital group with one of the most premier money managers of all time. How you got that, the opportunities that presented themselves along the way are very, very interesting story that go back to extra in New Hampshire. Can you give us a flyover just of your educational experience? The way you ended up at an Ivy League school is a little different than most, and I find it fascinating.

Neil Holzapfel: Yeah, it’s a great story in one rooted in what we just talked about. So that’s a good Segway. Just because when I kind of started, you know, going through puberty and noticing women around me, young women, I realized most young women I knew were interested in athletes small town, New Hampshire. And obviously my dad, who didn’t have a father, really benchmarked a lot of his view of masculinity around physical strength. You know, so I started freshman year had just started, you know, puberty probably 10 months before or five £850 pretty slow on the feet decided to go out for the freshman football team and got beat up so badly with that combination of, you know, lanky, skinny and slow. I got beat up so badly I went to the starting tailback. His name was Brett Rossmann, a little Jewish kid, but he was stacked and I’m like, Dude, what are you doing? He’s like, I lift weights. I’m like, Can I come? He said, Sure. Little did I know that his stepfather was teaching Driver’s Ed at the summer school of an elite East Coast boarding school called Phillips Exeter Academy. And Brett had a gym pass a week, six days a week for two years, we pumped iron in there and I packed down about 50 pounds of muscle and got kicked out by the security guards a few times and kept on going back. And I was pretty friendly, so befriended people and smiled and said, Hi, and I just like none of the prep school kids use the weight room, so I just blew it up in there and eventually an admissions officer was like, You were like one of the strongest kids in the school. How come you don’t play any sports? And I’m like, I go to the public school in town. She’s like, You’re a townee. Like, Yeah, she’s like, You do well in school. I’m like, Yeah, it’s like, Do you want to come here? I’m like, I don’t know. I never thought about it. So she she sent the application. I mean, this is when you come from my kind of bad. No one in my family had been university educated. You know, I went home, told my parents, I’m like, Should I go? And then something something the application. They gave me a scholarship. They’re like, I don’t, we don’t know, do what you want. So I went to Phillips Exeter in Grade 11, and it was a life changing experience, as you can imagine. And for whatever reason, it was a really smooth transition for me. You know, I didn’t feel and I think this is where I see God’s favor. I’ve always been a bit of a grinder. So, you know, I took to it like a duck and water, both the academic work and the sports work and my like junior year, they’ve got 10 college counselors. They’re like, Yeah, you’re not going to cut it at the Ivy League. It’s too competitive from here. But senior year, as captain of the football team and we won nationals in rowing and my test scores came back great and ended up being able to go to Harvard for undergrad where I spent, you know, a big chunk of my time rowing. I rode for Harvard. I was captain of the men’s heavyweight rowing team and then on the servant leadership team of Christian Impact as well. And that’s coming from a small town in New Hampshire. That’s really where I found just some brothers that we actually experienced a mini revival there. And I think I have a theory. We’ve spoken about it recently, but Christian Impact, which is the campus crusade at Harvard, I think it had four people a year. My cohort got there and the year we left at a weekly meeting just for athletes in action, there were like 70 to 75 people. Wow. Which is a big number for a campus of six hundred undergrads, right? Like, that’s a that’s a sizable it’s a of the population. And I think part of my theory and you know, how God moves, the Holy Spirit moves in certain times, but I think the core of what happened was real, raw, just intimate sharing confession of sin and a real passion for worship. In that cohort, that Bible study I was in my freshman year, that was pretty awesome. And then I went for Cambridge, for graduate school. I thought I was going to be an Olympic rower at Cambridge, where kind of the truth came out that I just wasn’t that good. So, you know, I was fine, but I wasn’t Olympic material, and I had about thirty five thousand dollars of debt from all my education, and I had a Ph.D. place at Cambridge in international studies and thought I was going to do development, work in the international, you know, whether working for the U.N. or as a missionary, but as God’s providence would have it, I figured, let me pay off some debt before I do the Ph.D. send out my CV to a bunch of investment banks and financial companies because I figured they had the money to pay off my debt and capital was the only place that gave me an interview.

John Coleman: Wow. You know, Neal, it’s a great story about finding Phillips, Exeter and Harvard. I will say the only other similar interesting story I heard was the commencement speaker. The year that I was there, the student commencement speaker had found Harvard because he used to steal bikes on campus. So at least you found a more reputable way to get introduced to the school. Now I know you went to Campus Group and you talk about that because they gave you an interview and you had this debt to pay off. But at that time you discovered an interest in Africa as well, you know, studying international relations? Or would that come later?

Neil Holzapfel: Well, I can tell you, John, it’s a good question exactly what happened. I was in the history library at Cambridge University, working on my master’s dissertation, and because I was in the UK, I would, you know, I had the internet back then. I’d flip up the BBC before I dig into my masters because I was focused on international studies and a headline came up on the BBC. This would have been May of 2001, and it said the headline was very simple three to four million people had died in the Congo since 1996. Wow. And I kind of had this moment just I’ll tell it like it is, and this is probably anger. It’s kind of my issue in life. Right. It’s my super strength. And it’s like, think about rowing and rowing. It’s the only sport that was once a form of slavery. You sit on your butt pulling in or going the opposite direction, right? It’s basically a hurt contest. This is going to take it to the wall and hurt the most. And I think I just had so much rage inside of me. It was a good way to air it out. But when I read that, I was like, I just went to Phillips, Exeter, Harvard University and Cambridge. And I haven’t even heard about this. And I’m sure maybe some people in the podcast might have the same experience. But after the Rwandan genocide, which most of you have heard about, there was an internet saying conflict. At one point, seven African countries were involved in the northeastern eastern part of the Congo because the Hutus and others perpetrated the genocide against the Tutsi and sympathizers. They fled into that part of the Congo, so Kagami has been going after that area and the people there for the last year until now. And Zimbabwe and Uganda and a bunch of other countries sending troops, and basically there was a civil war that it killed three to four million people. And I had never heard about it after just finishing, you know, what is it, seven years of complete elite education. And I’m like, There’s a problem with that.

John Coleman: Why do you think that is? Neal, you know, because it is glossed over, I think, and it’s treated differently. I mean, what’s behind that? How can people so educated be so ignorant of what’s happening to such a huge group of people in the world?

Neil Holzapfel: Well, John, there’s been a civil war in Ethiopia in the last 17 months that’s probably killed many multiples of the number of people that have died in Ukraine in the last month. How come no one knows about that? Yeah. So to answer your question, I don’t have an answer. But what I do know is say is the father of lies. So there are lies and there’s untruth that subtle. There’s some that’s more obvious. You know, one of my favorite examples, I don’t want to get distracted, but I really believe that the evangelical and when I say evangelical, I mean, people who believe the Bible is God’s word, they believe in a conversion experience, a choice to follow Jesus, and they believe that God is active in our lives. Right. That’s theologically a broad based definition of evangelical. But the Evangelical Church in America should be the most powerful force for kingdom change and salvation and redemption and renewal in the history of the world. But I don’t think we’re doing it. And I think because people have bought into and I’ve done this on my own things that aren’t true. You know, for example, I’m not sure if anyone out here is down with the Bible project, but man, am I just having a blast with the Bible project this year? So shout out to the creators of the Bible project. I mean, we’ve got three boys 10, nine and three, and every night bar tonight, I’m like, All right, we’re doing a Bible project. VIDEO And they are so down with it. Even my three year old is like, Let’s watch the Bible, and it’s just so good. But it’s been so refreshing to really get stuck in the Old Testament again and in the Old Testament. And with the reading program like God’s Passion for the fatherless, for the foreigner and for the widowed, it’s just all over the place. Yet in America, there’s like over a hundred thousand children who are in foster care, right? And foster care means no one wants you in their family, right? Like, if you’re in foster care, you haven’t been adopted. So for me, the concept of having orphans in America, where there’s tens of millions of evangelical families who know who Jesus is, it’s just unconscionable that there would be any orphans in America that places the lonely and families.

Henry Kaestner: That’s a great challenge, and I think our audience now can see how when we started this off, I said that Neal has done a great job of challenging me. Neil, I want to get back to the work that you and let’s say, ho do with orphans. But before we go there, because that’ll be a little bit more in terms of real time, although you’re doing a bunch of things now you’re doing the raise, the children, you’re doing investing. Walk us through your time at Capital Group and what you learned about. So you came to understand, of course, that there are all these people that have been dying in the Congo. You want to get involved and then you do and you get involved in the investment side. Walk us through that time about what it was like to invest in Africa and what God taught you through that.

Neil Holzapfel: Yeah. So I read this article and just became just totally intrigued by what was happening in Africa and reading about it. But there was no runway to get here or do anything here or anything like that. So I go to capital kick off and the Associates program, a training program. And I was based in L.A. for almost three years. And just really, I love numbers and I loved the culture of capital and the people. And it is. It’s a phenomenal place to work and a great place to be. It’s gotten really big. I think that brings its own challenges, but. Halfway through that training program, I read another article that said South Africa will have five to 10 million orphans in the next decade. This would have been 2002, and my younger brother, who followed me to Harvard and was also captain of the rowing team at Harvard, he’s a real rower. I was like the prep squad. But he he said, Let’s do something for those orphans in South Africa, let’s do something and I’m like, Let’s do it. But there was no runway. And then the next year, providentially capital came to me and said, Hey, we’ve got an opening for someone to cover South Africa and invest in the public markets. Do you want to do it? And I was like, Absolutely. So I came to South Africa. The capital gave me a few and a million bucks was like, Go invest it, you know, hang yourself a couple of times. I’m like, Where do I start to like, that’s up to you? And I came here for the first time in two thousand and three and started coming down once a quarter or three times a year and meeting public companies in Africa and the Middle East and investing in them, which I did between 2003 and 2012 before we relocated down here. So it’s just I mean, there was no plan. God had the plan. I mean, I I am so grateful. Looking back at his providence. Amazing, he’s so good, and she’s so not that stuff goes right, right, because the rain falls on the righteous and the unrighteous, and I feel deeply humbled saying that, but I can see that there was a plan that I just couldn’t have seen or understood.

John Coleman: Neil know what’s striking to me is just how much of a passion you have for people and for the people of the African continent. Specifically, you got handed a big pool of cash to invest at a relatively young age. It sounds like a capital group, and I know what that’s like in big organizations. You know, three or four hundred million dollars is quite a lot of capital to manage. For a big organization, it doesn’t feel like that much. And so they can give young people a lot of responsibility early. Talk to us about what you learned investing in Africa and for someone with your passions, you know, a lot of people pursue ministry or a service rather than something like investing. Why was investing fulfilling to you in the context of your passion for the people of Africa? And just tell us some stories of what investing there was like and and what you learned about being successful and investing across the African continent?

Neil Holzapfel: Oh man, that is. I could talk all day about you. Just ask like five questions. But what I will say is capital. One of the wonderful things about that culture is it’s high responsibility, high accountability framework. So because you were in the multiple portfolio manager system where everyone’s managing money, you got basically assessed on your results, which are mainly quantitative and somewhat qualitative. So no one could kibosh your career. You could say, I want to buy this stock if people are like, you’re dumb, you go and buy it and it goes up well, everyone thinks you’re a genius and you get paid. And that collegial environment really was powerful to witness and be a part of. And you’re making decisions because investing is making informed decisions based on people and businesses with limited information. And the beauty of the public markets is if the story changes, you can exit, you can sell. Right. Private businesses, we know that’s not so easy, especially in a place like Africa, which has very undeveloped capital markets and significant risk. So, yeah, I learned a lot about thinking about economies from the macro economic picture and what makes them systematically competitive. So for instance, let’s take a snapshot right now. Up until Ukraine happened, the war in Ukraine kicked off a month ago. My favorite macro country on the continent would have been Egypt, right? They free flow to their currency. They just devalued it by a bunch last week or a few weeks ago because they’re a big wheat importer and all that wheat comes from Ukraine. So they knew they were going to have problems on their accounts, but they free floated their currency. They cut their deficits dramatically. Their fiscal deficits are running a primary surplus. They investing in household formation massively at the moment because they need to. Cairo has a shortage of housing, and they’re just doing all the right things right now, and they’re growing four or five percent a year. I mean, kind of hectic that it’s a nominally Muslim dictatorship, whereas South Africa has just gone through a terrible decade with such a corrupted top leadership structure. Well beyond my expectations, they’ve set us back here 10 to 15 years from a macroeconomic point of view. Now that being said, both places still offer investment opportunities, but they’re in different places because one of the great things about being here, it’s kind of like. It’s a bit of open canvas, there’s still so much room to build. In core industries, whether it’s agriculture, whether it’s energy, renewable energy, whether it’s, you know, food production, there’s financial inclusion, there are pretty big blue sky opportunities where if you back the right people in the right sector and continue to back them, you can really grow things to scale. And so I think macro has to be part of the analysis, and I think Egypt, the next five, 10 years are probably going to be great there. And anyone investing in the public markets, especially after this devaluation, should feel good about it. Once you leave Egypt, it gets a bit trickier because when you’re in the bigger economies like Nigeria and South Africa, you have to be much more selective on what you’re doing, who you’re backing and what the opportunity is.

Henry Kaestner: By the way, I love that you mentioned Egypt. We had a Faith Driven Entrepreneur meetup in conference just meant to be reasonably small in Cairo, I guess, just two weeks ago. And the community got so behind it, it was way oversubscribed. The national news came and reporting on it, and it got distribution all throughout the country. God is doing something there in the entrepreneurial climate in Cairo, and that’s super encouraging. I didn’t know about it against this macro economic backdrop that you just talked about, but that’s a no.

Neil Holzapfel: It’s about six weeks ago again after this wheat issue. I mean, literally, Egypt, like I said, is the largest importer of wheat in the world, and they subsidize it. So they’ve tried to reduce subsidies for petrol and for bread, but they’re just going to get crunch right now. But previous to that, it’s that place has got so much going for it at a macroeconomic level right now.

Henry Kaestner: OK, we’re going to go through a time of the podcast. We’re going to do kind of rapid questions and think about this. Just real, real quick answers kind of like pardon the interruption, which is near spin program and ask you a couple, Joe, ask you a couple and then I’ll close. And we always close with with my favorite question, which is what are you hearing God through his word recently? OK, so number one question answer is 30 seconds or less. OK, give us three things that an investor needs to know before they consider putting money into Africa.

Neil Holzapfel: Who am I backing? Who am I co-investing with? And. What do we do together when things go well or go to plan or things don’t go to plan?

Henry Kaestner: Good. Next. Give us a 30 second pitch on why Africa makes sense for a crisis. Fowler listening to this podcast that’s been entrusted with Sterling Capital. Why should they? Why should they look at Africa and what’s a good way to get started?

Neil Holzapfel: I think that 30 seconds on investing in Africa, I would say backing the right people, you have the right experience and the right industry segment with the right capital, the right kind of capital and the right support you can you can build wonderfully redemptive businesses at scale and make a lot of money as well.

Henry Kaestner: So you talked about AG being one of those,

Neil Holzapfel: I think agriculture, agriculture is not a place to make a lot of money. I think it’s a place to make. You can make a bit of money because it’s the wrong end of the food chain. Right? But the impact you can have when you get it right can be fantastic. I think energy is very interesting. I think financial inclusion is very interesting. I think education is very interesting and I think those are all areas where LEAP Africa is kind of behind or in some cases in renewables has moved quite far, quite quickly. But you can build big businesses at scale when you get things right.

Henry Kaestner: OK, my third one and this kind of lightning around is I want to spend 30 seconds unpacking financial inclusion. And if you channel your inner John Staley on this, I won’t be disappointed.

Neil Holzapfel: Yeah, well, that’s all I’m going to channel because he’s one of the guys I’d back any day, but he effectively we don’t have financial inclusion, right? It’s still very much a very poor place. It’s still very cash full of physical cash, which is a disaster and a lot of people on our bank accounts. So if you can get every African, a digital identity and you can create ubiquitous and easy way to pay or be paid electronically and you combine that with data connectivity, you can dramatically reduce the cost of any financial service.

Henry Kaestner: Digital identity, micropayments, connectivity When John rolled that out and it’s just like cash I love a simple framework makes all the sense in the world.

Neil Holzapfel: It’s a very simple framework, and John’s the guy who can pull the pieces together. So that’s something we’re working on actively now, and we’re really excited about it.

Henry Kaestner: You say working on. Does that mean working on get him on the podcast? I’m just kidding. Now I know you’re working on a new venture,

Neil Holzapfel: so he would he’d be great. Well, John, John might. He might be harder. He’s not as good of a storyteller as I am, so

Henry Kaestner: nor is good looking.

Neil Holzapfel: Well, he’s a little bit older than me. The African sun’s been hard on them.

Henry Kaestner: They like Geoff Johns listening to this. John, you look awesome.

John Coleman: Maybe so I’m going to jump in. Henry with a couple of lightning round questions in mind, Neal, you talked about the importance of backing people on the African continent. Maybe talk about one company and one fund that you think are really exciting right now.

Neil Holzapfel: Well, I mean, the fund, the guy that you got you, this team knows who I really we’ve talked a journey with and I really love working with him and trust him. Is Richard Tim Keller and Sango. So I love what he’s done. He’s he’s been a very long thinker with his approach and done things the right way, and he’s fantastic. And I’d say that being the one saying, go,

Henry Kaestner: he is amazing and I should just throw in there. You get a guy who is partners with Ray Dalio of Bridgewater, goes back to Africa, brings what he’s learned in the United States. He’s he’s the real deal. Let’s get to his. One of his partners is a pastor. The guys, he’s outstanding.

John Coleman: And where is he investing? What are the themes?

Neil Holzapfel: He’s a mid-market and mid-market private equity initially fund of funds, but now making direct investments and set up a permanent capital vehicle.

John Coleman: Awesome. And what’s a company? So if there’s any top of mind you?

Neil Holzapfel: Yeah, I mean, I know, I know on the private or the public side either one. Yeah, I I’m pretty I don’t want to talk my own book, so I’m going to try to talk about something that I’m not involved with. There’s there’s one of we have owned one business for years that’s really growing rapidly at the moment. It’s pretty exciting because it’s it’s it’s got the potential to drive decarbonization at scale and help help supply energy here in South Africa. I’m excited about that.

Henry Kaestner: But can you say the name? Can you see anything we can say to them on this podcast?

Neil Holzapfel: Sure, sure. It’s called Power X. We’ve owned it for a long time. It’s the only well, it was until last month the only independent power trading license in South Africa. It’s actually fascinating, right? Because we talked about macro, but as disastrous as macro has been in South Africa, they have basically completely liberalized and deregulated the energy industry. So there was a state owned monopoly which owned the distribution of generation and the transmission lines here and in the last two years, they’ve broken it up into three entities and they just issued another trading license and they’re, you know, really changing own generation kind of limits so anyone can build up to 100 megawatts without having to go through the brain damage of getting a generation license. And we just happened to be positioned right in the middle of that. So that’s a good one. I’m very, you know, fired up about what we’re doing with John Henry in buying this payments company. I think that could be fantastic. I, you know, when when COVID kicked off, there were a bunch of public companies. I was fired up about MTN was my biggest and the one I was excited about the most. But that puppy just been ripping it up like. Probably like two hundred and fifty percent now it’s a lie, it’s up five hundred percent, it like bottomed in March of 2020 at like 40 or 50 rand, and I think it’s over 200 now. But then there was a logistics company I really liked called Imperial Logistics that just got taken private by DP World a few months ago. So they got a buyout offer from an Emirati, an Emirates listed company called DP World. But there were a basket of public companies I like back then. Right now, I’m just trying to think I like. I’m nosing around in some small caps here, but I’m not particularly fired up about them. I’m more excited about what I’m working on.

John Coleman: That’s awesome, Neal. And then to close us out, you know, Henry mentioned, we’d like to ask people what God’s teaching them and especially anything that you’re encountering in God’s word that’s been an inspiration to you recently or helped you learn something. Does anything come to mind just a lesson from God’s word that that you think has really struck you recently?

Neil Holzapfel: Well, I think like I referenced the Bible project earlier and going back, you know, through the Pentateuch and then Samuel and now in Kings and just realizing, I mean, John, you got it all in there, right? You know, you’ve got murder and you’ve got adultery and incest and all this kind of you’re like, What a disaster. And on one level, you look at the world today, look at Ukraine. What a disaster feels like. We haven’t moved that far, right? Yeah. And yet, what a disaster I am. You know, for instance, we didn’t dig into this too much, but when my three year old disobeys me and I get angry and I speak to him with an appropriate tone, John, what am I actually angry about? He’s three years old. Yeah. Right. There’s a part of me that’s angry because I think there’s there’s right and there’s wrong. But most of my emotion is tied up in me, in my story and my past and my wounds from my dad. So learning and thinking. Daily minute by minute, moment by moment and letting the Holy Spirit and the truth of the gospel. The good news about what my real dad did for me. Bring me home to a family. Say that I’m a son. I’m a treasured son because he says, so send my brother in in that family. Jesus, the god of the universe to die on the cross, to bring me home, and then to send the spirit to be with us. Like, That’s that’s life. That’s love. And I want more of it. I want my family to have it, and I want people. I’m around to have it. And if I can share that with them, I need to. I realized I’ve lost, so I used to be a really friendly person. I’m not friendly anymore. I want to be friendly and I want to smile at people minute by minute, moment by moment. How can I love the next person around me or is my friend? Tim Keller says. Wash the next pair of feet.

John Coleman: Wow, Neil, that’s a great word, great word and a great place to end. We’re so excited for the work that you’re doing in Africa and with vulnerable kids, and we’re just really grateful that you spend time with us on the FDE podcast today.

Neil Holzapfel: A pleasure and I love the work you are doing and John and the team, and thank you so much for having me.

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On today’s podcast we have the joy and privilege to hear from an investor and entrepreneur team that met via the Faith Driven Marketplace. Investor Tom Lernihan was moved by the mission and simple solution of the company Pureflow founded and led by Jared Fulks and Collin Wenrich. 

After traveling around the world to Uganda, Collin had a revelation as his calling zipped past him on the road in the form of a motorcycle… also known as a boda. Anyone who has visited this part of the world knows that motorcycles are the one primary way to get around. In fact, being a “Boda Boda” driver is one of the fastest growing occupations in East Africa–home to more than 1 million motorcycle drivers. However, after further research, Collin discovered that less than 20% of all these drivers actually own their motorcycles. And so began Pureflow. 

After investing a few thousand dollars of his own money and striking up a deal with only 6 boda boda drivers, Collin went pedal to the metal. Since launching Pureflow and partnering with Tom, Pureflow has grown to more than 100 drivers and counting. Together Collin, Jared and Tom share why they do and how they continue to grow without outscaling their culture, purpose and impact.

Episode Transcript

John Coleman: Welcome to the Faith Driven Investor podcast. This is John Coleman joining you today and I’m here with my good friend and partner, Luke Roush. Luke, how are you doing?

Luke Roush: I’m doing great. It’s going to be on. I love the story we’re going to be able to profile today. I love seeing entrepreneurs and investors coming together to further the mission that they’re on. So I’m excited for our story here.

John Coleman: That’s awesome. I think we all are. And we’ve got three fantastic guests today, all coming together with a similar mission. They actually met through or at least started interacting through the marketplace, which we’re going to come to, which is a really exciting story. But we’ve got Colin and Jared and Tom here coming from different walks of life to really invest for the kingdom. And so maybe just to start off, guys, give us the two or 3 minutes on each of you, just your backgrounds and how you got interested in this space. And then let’s start to talk about how you got introduced to one another and came together, maybe lead off. Jared, let’s start with you.

Jared Fulks: Yeah, awesome. So, Jared, folks, I’m based in Atlanta, Georgia. My wife and I live right outside the city. And my story began in Columbus, Ohio. I grew up a pastor’s kid. And I thought I went to college to play basketball and I thought that was going to be the end all, be all, become a college basketball coach. I quickly learned that there’s a lot of steps between dreaming that and actually doing that and after an injury in college, ended up transferring to Liberty University in Virginia. That’s a part of the story later. But after college, God did let me live out the dream a little bit, coaching semi-pro basketball in England. And the reason I got pulled back to the States was I was now dating my now wife and so came back and we got married four years ago and quickly jumped into entrepreneur space here in Atlanta in the tech space. And I loved it. I had this tension, though, full time ministry, full time business. God, what did you want to use me for while you’ve given me this life? And so my wife and I started praying. And after about three years of praying, God reconnected the dots with the fellow peer from Liberty, which was Colin. So I’ll kick it over to him. But that’s how our stories got reconnected five years later, after we’d both gone our separate ways.

Collin Wenrich: So my name is Collin Wenrich born and raised Bay Area out in California. And my story really starts when I went to school at Liberty University. And so when I was over at Liberty University, I was pursuing an electrical engineering degree. The Lord quickly rerouted me, sent me on a commercial corporate aviation path, and admits that after about two and a half years, he then sent me on a wild adventure to Uganda. And at that point I teamed up with 15 other young adults based out of actually right outside Atlanta. I think it was over in Gainesville, Georgia, through adventures and missions and sent us for four months to Uganda. I had no idea what I was going to be doing other than I was going to be in Uganda for four months. So we ended up partnering with some local organizations, some local churches out there, and I quickly fell in love with the culture, quickly fell in love with the people. I had no idea how my skill set or what I was passionate about in life was going to align with the future in Uganda. And the Lord did His work in the near future after that. But I knew quickly that it was going to be a part of my future. So I called my parents, called my family. After three months, I said, Buckle up, it’s going to be a wild ride because Uganda is going to be a significant part of my future. So I finished up my four months, came back to the States, finished up my degree, moved over to Uganda to start a ministry. And this is where I had some of the similar tension points that Jared It was like I was full time missions, but then people would always ask me about the sustainability aspect. And so two years after being a full time missionary in Uganda, I started to wrestle with God on what it looked like to start a business. And then we’ll fast forward to Pureflow here soon.

Luke Roush: Awesome. It’s awesome. Awesome.

Tom Lernihan: Guys, good to be here today. My name is Tom Lernihan based in Indianapolis and I lead a venture fund called His Fund as a reference. These are God’s resources and we’re here to steward them on a way to bring him glory. And we focus on investing in faith driven entrepreneurs that have a social mission and an opportunity to create jobs in under-resourced communities. And I can’t think of any better example than Pureflow in what Jared and Collin have built over the last several years, we’ve built up a portfolio of investments that are industry agnostic. They’re focused on four main geographic regions, US, primarily, East Africa, Southeast Asia and Central America. And what we’re really looking for is just partnering with entrepreneurs that have, you know, an opportunity to do incredible things. And we get the blessing to work with great guys like what we’re here talking to about today.

Luke Roush: So the beginning of every great love story or every great investment partnership, there’s a spark usually. Thank you for sharing a little bit about each your backgrounds, but I want to hear about the spark when you guys first connected and what caused you to want to learn more and get to know each other and do life together.

Tom Lernihan: Well, I’ll start first. If you haven’t heard the story of Pureflow, what they’re doing. A great place to start is by going to their website and watching their founder story. That’s my first exposure to what they’re building, what they’re trying to do, and it’s an awesome example. It’s a four minute video and I can’t recommend it higher. It gives a great lens into just the mission and the focus on what they’re trying to do at Pureflow. And after watching probably 2 minutes of this four minute video, I was hooked. I said, I’m in, I’m ready to go. Let’s do this. And then got an opportunity to connect with Jared and Collin shortly thereafter and just was instantly connected and aligned with mission and what they’re doing and just was really passionate about finding a way to join on and help in the mission, what they’re trying to do.

Luke Roush: And so what was the original inspiration around the idea? Maybe Jared and Collin share a little bit about what got put on your heart or what you saw that then forced you to say, Hey, we’ve got to do something here, which is usually what creates new companies. Great companies are born out of an unmet need that an entrepreneur resonates with and then wants to do something about. Maybe just share a little bit about that founding vision story.

Collin Wenrich: Yeah, absolutely. So when I was full time ministry out in Uganda, I had about it was about a mile and a half walk to and from our partnerships every single day. I did not have a vehicle and I wasn’t riding motorbikes at the time, so it was like good old fashioned two feet. Took me everywhere. And during that walk, I would just stop and talk. You know, I didn’t really have a lot of time constraints. So all along the way there would be these Botha stages which are like these areas where the motorcycle taxis would group together, they’d hang out and that’s where their business would be focused out of. And so I would just stop and talk with them, just shoot the breeze, just catch up, get to know their names, what they’re doing, their families. And I knew a little bit of the local language at the time, so I would say a few things and make them laugh and we’d joke around and then I’d continue, you know, after building some of those relationships through some months into the years, you know, I started to ask more in-depth questions and started to realize that, you know, these guys were on these motorcycles. Some of them looked absolutely terrible and they didn’t own them. They had no ownership, no equity within these motorcycles that at that point had no idea how much they cost it. But when I soon started to figure out, like, you know, what are the values of these motorcycles, it was raising some red flags and some questions that guys have been paying seven or eight years on these bikes, but there were only 12, 13 hundred dollars to acquire. And so really it was just through walking up and down town, asking questions, building relationships with these guys over a period of two years. Then we started that’s when we started to address the issue that was literally right in front of us the whole time.

John Coleman: That’s wild. So you got a sense of this market that most people probably wouldn’t even know exist, or actually it’s a market failure over there where there’s not really local financing available in the way that we’d think about that in the U.S.. How did you start to identify the way in which you could engage with this problem, and how did you begin to set up that business in its infancy?

Collin Wenrich: Yeah, so it was that was the fun part of it. When we saw the issue and I say we at this point it was a business partner. He was actually working on the ministry side with me at that point and myself. And we knew at the centric focus of why we wanted to do what we were doing, it was all Christ based. It’s like we want to share the gospel with these guys. You see them working day in and day out and I mean seven days a week, 14, 15 hours a day. They’re driving people, they’re driving things, they’re putting bunk beds on the back of hundred cc motorcycles, and they’re going and there’s no time for rest. There’s limited time for family, and there’s absolutely no time to sit and worship. And so it was one of these instances where it’s like, okay, you can rent to them, you can make some money, you can pour it back into the ministry. That’s great. Okay, we can sell these bikes, but we’re still not doing anything of significant value here. How do we give them a chance to own the bike but go on a journey with them? And in that journey, how do we teach these guys, teach them about their finances, teach them about how to lead their families, and ultimately, how do we get them around the table to share the gospel with them? And so it was all based around how do we get these guys together at a table to share the gospel?

John Coleman: That’s awesome. And at some point, you know, every business for most businesses come to this point where they can’t bootstrap it anymore. Their personal finances aren’t going to cover the model, which is where the investment community comes in. Maybe Jared and Collin talked to us about how you got to that point and when you needed the capital, when you realized you needed to go out and find capital to support the business, what was that decision making process and how did you decide to go where you went?

Collin Wenrich: Yeah, so originally we had started with $6,000. We bought a six bikes at that point, and so we would inject revenue as fast as we could to get another member on the bike, because as soon as we launched this program, it was a hot commodity and people were signing up. We had over 100 applications. Within ten days. So at that point, it was inject revenue as fast as we can and then it was do it again, get to bike seven, get to bike eight, get to bike nine. Then Grandma came on board and was like, I love it. I was like, All right, let’s do it, grandma. So Grandma buys Bike ten. But we started to grow and we kept growing organically for a while until we got to about the 100 bike mark. And at the 100 bike mark, you know, Jared came on board and this is where we really started to analyze our finances and our growth and a whole different line of sight.

Jared Fulks: I saw the business for the first time and like you guys would be if you watch the story, as Tom did, I’m in the same boat as Tom. I was just inspired by the story. And so at the time, my wife and I agreed that I could just give 40 hours of work to Pureflow for free because I was about the vision. And I said, this is going to serve a lot of people. And so that’s how we started. Collin was back stateside because of the pandemic. It was early 2020 and the businesses is kind of in this uneasy ground of does it grow organically? Does it scale now? And I saw the model. I said, look at the numbers and come out of the tech startup space where we had raised money. I was like, I think there’s funds here. But we battled the back and forth of nonprofit or for profit. Could we crowdfund motorcycles? And the challenge with that is, is, you know, how do you move the money? How quickly can it scale? And are we just trying to put heart strings to tell the story to people to get crowdfunding? Or on the flip side, do we go to investors? And Collin and I had no idea about the impact investing space. I mean, Faith Driven Investor Faith Driven Entrepreneur was not on any of our radars, and so we started just doing a little digging in and that’s how we got into the space and sort of finding the right partners to partner with.

John Coleman: That’s awesome. And I think you all actually connected with Tom via the marketplace. If if if I’m correct, Tom, maybe just from your perspective, talk to us about why you got involved in the marketplace and why you viewed that as a platform where you could find great entrepreneurs like this and how you came together with this team.

Tom Lernihan: Yeah, absolutely. The marketplace has been an excellent resource for the work that we do. We built up a network over the last several years where most of our investments have come through some sort of warm introduction into a business. But the marketplace is quickly replacing that for us, where we can go on and find really high quality investment opportunities that are very much right in our wheelhouse and the types of deals that we like to support. And one of those that we came across was Pureflow. It’s just really easy to see the impact and alignment on what they’re trying to do with square in the center of what our fund is set up to achieve. So it was a very seamless process for we’re able to connect with Collin and kind of reach out via the marketplace and get scheduled on a call. And from the very first interaction, we knew right away that this was a business that we wanted to partner with and help them grow to, you know, significantly more bikes than they had in the first round.

Luke Roush: So there’s always these choices to make around how quickly you want to grow and the pace of expansion of the business versus sort of control and the ability to kind of measure carefully before you have to start cutting. How have you guys modulated that sort of desire to have more impact, but also desire to understand the mission in the model of the business? Maybe just speak a little bit to how you’ve regulated on that front?

Jared Fulks: Yeah, it’s a question we ask often, and guys like Tom, Luke, you might know from spending time over in Asia, but there’s a lot of bikes, there’s a lot of guys that don’t own the bikes. So the market’s big. You don’t have to look very far to find market opportunity. And Tom, having spent a good bit of time in East Africa, understood that more so than I think most partners would understand if you haven’t set foot on the ground there, and honestly, more so than I understood until I first saw it. And so you would then ask that question how fast you scale. And to be honest, when we first did our first round of debt financing, we really didn’t know what the end goal was. And we still don’t really know what the end goal is. But what we knew was that we want to scale where our culture doesn’t get lost in the scaling. So we kind of measured our scale speed based on our culture and our people. That was kind of from day one. It’s about the people on both sides of the coin. And now we’ve kind of refined that more specifically and our growth strategy around this concept that we never will out scale the table. So Collin mentioned earlier that the goal is to get these guys around the table every week because they’re not in a local church. A lot of them are not in relationship with Jesus. I mean, a lot of the places we work, you have many different religions represented. And so the heartbeat of Pureflow is to get guys to the table. Because if we read through Jesus’s life, that’s where change was happening. That’s where brokenness was revealed. That’s where he was able to be love, light and speak truth to people. And so our goal is to get people around the table as often as we can so our guys are paying off their loan over two years. 104 payments. That means 104 times they’re getting fed spiritually and physically for 30 to 45 minutes at a table with ten other guys. And there’s no misses. So that’s for 104 weeks. Again, have been worked in the church before? That far outweighs a lot of the small group models that I’ve tried to implement. And so we love that. So at this point, yeah, we want to scale to more markets, but we don’t want to out scale the table. And in order to serve people at the table, it requires the Pureflow team to be understanding of our core values, which the number one is serve with purpose. And so if we outgrow our values and we outgrow the table, it’s our indicator, if you will, of or out scaling the impact we want to have.

Luke Roush: So I want to ask the question actually, it’s a little bit awkward and I’ll go ahead and acknowledge the awkwardness on the front end. But I want to hear actually challenges maybe Jared and Collin, from your perspective as you progressed through the last couple of years and then maybe also from Tom’s perspective, key obstacles, challenges that you’ve had to overcome.

Collin Wenrich: Yeah, I can start on like in the beginning when we first launched this program, we had a little bit of backlash from like local loan sharks and some guys who are running some mom and pop shops with spare parts and fixing bikes. And especially when we built our first permanent building, you know, day one of opening, they shut us down and they shut us down for about two and a half weeks as it was kind of there was a lot of like petty litigation that we had to proceed through. And so really on that part, too, it was getting the community to understand, like, why we’re here and what we’re doing. And it wasn’t because we wanted to sell more bikes than a distributor, right? It wasn’t because we wanted to take the other loan sharks and take all of their bikes. Our core focus. Right, was to disciple these guys and get them financially literate to get them and savings groups and just give them and allow them the opportunity to become the godly men that we see in them. And so once we really built some platforms for the community to also get involved and for us to get integrated within the community, we started to see those type of challenges subside. So that was like the first, probably first two years. And then I can let Jared share on the most recent ones.

Jared Fulks: Yeah, anytime you run to come to an organization, you guys can imply some of the challenges that you might face, starting with, you know, the Zoom stuff that we all love. And so that’s one thing. And structuring our leadership to scale was a big shift that we made over the last 18 months, putting people not only in the right place in the bus, but also ensuring that their understanding of what that role and responsibility entails. Because our team is really young, we have 27 full time team members now, which is awesome. I mean when I came on, I think we at like maybe seven or eight two years ago and so scaling that along with the member side of it, again, we really want to focus on our team and now we have five branches, three main branches and two sub branches. And so the dynamics of that are a great healthy challenge for Collin and I on a daily basis of how do we best serve our team, how do we best cast a vision that pulls the people and our team towards the vision and it develops leaders? Because what we realize is that we’re going to promote from within. And so we need people that are focused on developing leaders and not just ensuring that we we get paid by our members. So I think that’s a good challenge to have, but nonetheless a challenge that we’ve come across.

John Coleman: So I love that y’all have talked about the spiritual impact on the individuals that you’re working with, and that’s such a neat engagement model. Talk to me about the broader impact. So obviously you’re filling a need in the community. What is that doing to these communities, the kind of economic and social impact on the community itself, on the individuals involved. And maybe, Tom, as they describe that, I’d love to hear you describe how you think about this difference between the social and individual and spiritual impact in the financial return that you’re getting. How do you balance those things as you look at the model that they’re creating?

Jared Fulks: I think the four big things we look at in the community that happen as a result of these guys owning this asset, which just for some frame of reference, when they own it, they double their take home income. So I kind of ask the question to everyone listening and I ask it to myself when I think about the impact financially is what would happen if you double your take home income? What would you do? And it’s surprising enough they do the same things that we would do. And it kind of comes in these four buckets of build. They build things, they invest in things they give and they save. And I think those are the same buckets that we would find ourselves in if we doubled the income that we took home. And so you can imagine what that does. Downward effect for families, multi-generational impact around kids not getting private education. They’re growing up under a roof now that’s stable. I mean, you can hear the stories of our members that have finished move to ownership. They’re now getting meat on the table more frequently. And a big thing that happens very, very common. Either they come back for a second bike. So what that means is they’re taking the first bike and they’re going to somebody they’re serving a market that we wouldn’t serve that needs to pay for a used bike. So they’re creating more jobs downstream, but they’re also creating a second source of income either through that second bike or their spouses starting a shop that happens a lot where they have now two incomes for their family because they’ve kind of gotten the chance to get above water to breathe for a little bit.

Tom Lernihan: And from an investor perspective, we came into this investment at the onset really excited about the opportunity to create jobs and really substantially increase their income, as Jared had mentioned. And that was our first lens, right? That was what we were really excited about. And you asked a question about how we balance the financial return and the social and spiritual impact. We’re blessed that our fund is set up in a way that we don’t have any financial objectives on what we’re doing. We’re trying to really achieve excellence on finances, but we’re not tied to any sort of metric to hit or to achieve. And so we get the opportunity to deploy capital with a social and spiritual lens first, and they just knock that out of the park. So if we were just looking at this from a job creation perspective, the opportunity to change the communities of these serves is exponential and something, you know, we could totally see this being replicated in many more cities around Uganda and East Africa and encourage that. But it’s really exciting for us when we see the intentional ness that’s there, focus on really investing into the lives of these drivers and focused on how they can serve them in their kingdom lens and really be partners with their drivers. And that was just an incredible experience for us, something that we aspire to replicate in other investments in our portfolio. They’re really leaders in this space and really pouring into the opportunity that they have.

Luke Roush: What you’re also speaking to that resonates with me is just this idea that and it’s sad, but it’s a very rare thing in an emerging market, particularly with jobs or individuals at this level that are not using private cars but are instead using bikes. It’s very unusual for people to actually, you know, care for them, to reach out for them to invest in their kind of growth and development as individuals, to help them think about what is my pathway going forward from here. And so, you know, my guess is that you’ve got raving fans with a really high net promoter score on the individuals that you serve as clients. Is that often the case?

Collin Wenrich: Yeah, I would definitely say that once you are embedded and integrated within the Pureflow family, I mean, it’s a beautiful thing and we love to invite and we love just to remain in relationship with them. You know, one of the hardest things, too, is when you bring new members into the program, is really sometimes getting past the barrier of the core essence of why we’re doing what we were doing, and that is bringing people to the table. Right? So they’ve got to come from where they’re at and we’ve got to come to the table. And sometimes they have to disrupt their daily schedules. Could be 30, 45 minutes to come sit at the table and conversate with us and share a meal. And sometimes it doesn’t make sense, right? Because of their lifestyle. It’s hustle, bustle, go, go, go. And every lost trip, right? That’s the money out of their pocket. That could be less lunch or less a soda or something small, but it’s still less something. And so, you know, Jared and I talk about that to what’s the value add of these touch points, these 102 and 104 touch points that we have with these guys through the duration of their loan. So sometimes is that pushback, right, of I can pay you for this bike, thank you for the program. But I don’t really want to show up at the table to where it’s like you come to the table, you have a meal, you meet with some great guys. Okay, I love it. But you have to do it again. Yes, we got to do it again to really like you start to build the trust, you build the relationship, and then they just keep coming because they want to. And then they get their buddies and they call you from another town and they’re like, Hey, I’ve got buddies who want to do this as well. We want to be discipled. We want to sit around the table like we’re hungry for more of what God has to offer. And those are the beautiful things that we love to experience and be a part of. But sometimes you just got to push through that first barrier.

Jared Fulks: Yeah. And Luke, I’ll say too, you raise an interesting question about the neglection that this part of society faces across most developing countries. And I’ve got a chiropractor friend that I spent some good time with, and he always talks about how we, especially in America, we neglect our backbone, a lot of vertebrae. And so but it has a lot of bad effects. And what people fail to see is that if you look at we estimate there’s over a million boda bodas in Uganda population around 4850 million. So that’s a lot of people doing this one thing. It is the backbone of society. We talk about homes and we talk about health and food and education. Those are all big things. But a lot of times we leave out transportation and you’ve got to have transportation. And so they don’t have a train system and people don’t own cars themselves. And so they have to get around these bodas. So you have two options. You can neglect them or you can figure out how to serve them in the way we look at it is every one of these bikes has a big light on the front of it. That’s the style of the Bajaj Boxer. And what an opportunity as we aim to disciple these guys that they could truly be light moving around the city in thousands at a time and the amount of impact that they have is far greater than we could ever have because they’re touching 50 people a day, giving rides in the back in a pretty intimate setting. Honestly, as close as you are, especially if you pile a whole family on the back of a motorcycle. So yeah, it’s often that neglected part of society, but. So important because they are the backbone of society.

John Coleman: So in a moment, we’re going to pivot and we’re going to ask each of you guys, if you don’t mind, just to comment on a scripture that you’re reading right now and what it means to you and just what you’re learning in the word. Before we do that, just one more thing. Tell us what’s next for Pureflow and is additional capital going to play a part in that as you think about further investment?

Jared Fulks: Yeah. And I’ll pass it off to Tom real quick, because Tom is such an integral part. And I mentioned we raised a little bit of money in 2021 and we saw that and we forex in 2021. And a lot of those great things happened and a lot of the challenges came as well when we did that and we were really not certain what was next. But Tom, can I pass that to you to kind of share maybe a bit of how you encouraged us in the growth stage? Because this really came around that the partnership that we found in Tom and their fund.

Tom Lernihan: Yeah. From the very early days, the vision that Collin and Jared had cast and how many bikes they were hoping to serve and what they could see as their their big, hairy, audacious goal. I looked at and I said, Guys, we can do more. We can serve more drivers. I know that there’s plenty of capital in the market that’s looking to support visions exactly like this. Let’s dream bigger, let’s move faster and let’s go crazy. And it even got to points where Jared and Collin has. Hey, we’ve got a real back, time a bit here. We want to stay laser focused on serving our customers and making sure that we are excellent at Kingdom Impact in everything that we do. So they’ve been really pouring in to me and like at myself, just making sure that I know we’re impactful, focused investors, but still we want to do it with excellence and we want to make sure we’re moving at the right pace. And so I think we’ve gotten to a point where we have a great plan moving forward. I think they have an excellent opportunity to serve a tremendous amount of drivers, and we’ll grow at a pace that’s really sustainable and allows them to continue this for many years to come.

Jared Fulks: Yeah, and to speak to the partnership side, John and Luke, it’s Tom was a huge asset for us in this next stage of funding. We are finishing up 2021 and we’re looking ahead to say if we’re going to continue growing at the pace we are, we’re going to need more cash. So raise a little more debt. And we had a call with Andrew Firman at Faith Driven and he encouraged us to go back to our partners because that’s what they are. They’re partners. And so we went right back to Tom and Tom once he saw where we wanted to go and he aligned again. When you have alignment in this partnership, you can have a lot of fruit that comes from that. And it took us, I think, maybe six months to raise the first bit and we raised like three exact and about six weeks to start off 2022 thanks to the partnership that Tom brought to the table and and being able to connect us to other people on the side of the table he’s on that we don’t spend as much time on. And so we can’t speak highly enough to the value of the partnership and what that means and why we look at our investors as partners and not investors, because we truly are trying to steward resources. That God is given us on all sides of the table to advance the gospel in places all over the world.

John Coleman: And that’s an awesome word. I mean, we see that all the time where, you know, folks will chase the highest value or they may think about their partners in the wrong way, capital partners in a more transactional way. But finding the right capital partner at folks like Tom and others that y’all probably met in this process can be transformational, both on a personal level for an entrepreneur who’s struggling through a ton of problems every day and, you know, encountering things, and then also on an organizational level where they can really help to cast vision, connect you to others who share that vision. And so I think it’s wonderful that you highlighted the depth of that partnership before we close out today. We do like to close just with what you’re learning from the scriptures, what you’re learning in your own spiritual walk, and maybe start with Tom and then go through to Collin and then Jared. Tom, what are you learning from Scripture right now that you want to share with the group?

Tom Lernihan: Yes. Now, I’m always learning, but right now I’m working through Hebrews and it’s the idea that God is an anchor in my life and all that we do, and that we tether that rope tight so that as the world drifts us and as we find ourselves ultimately following that flow, that the anchor, he’s the center of our lives and that we continue to stay on that path. And I share an example earlier. Jared and Collin have been great at just reinforcing that and the work that we do and keeping him central to our investment strategy. And just as a man of faith, keeping that central to my life is what I’m working on right now.

Luke Roush: Love that. You know, if there’s no current, then we don’t need anchors. Except there is a current. The current of this world is not the current that the Lord is necessarily want us to move in the direction of. So I love that word. That’s a good word, Tom.

Collin Wenrich: Yeah, thank you very much. Tom that’s good. I would say, you know, this has been a crazy season of life in such, so many beautiful ways. We were just over in Uganda for the past three months, my wife and myself, and just got back to the States and we found out that we’re pregnant with our first. So we’re very excited. But through that journey and through this time of prayer to have been. Praying and proverbs and Lord has put Proverbs 14 on my heart actually the last few days. It says, Whoever fears the Lord has a secure fortress and for their children it will be a refuge. And it’s really this like my hearts cry, my heart’s call on to the Lord of light. Man, I want to be just one with you attached to the vine. But also, as I raise my children, that they get to see that right, that they seek refuge under their father, who has submitted first and foremost to the Lord. And so that’s been my prayer. Navigating through a future fatherhood here soon and just seeking wisdom in the Lord.

John Coleman: That’s awesome. Congrats, Collin. What a great word. And Jared, I don’t know how you’re going to top a birth announcement to close us out here.

Jared Fulks: I’ve got nothing, man. Can someone closes in prayer? You know that that might be my role here. Now, I have been reminded, and this is part of the journey that I’m so grateful to. Collin, if you talk about partnership, there’s no other word. I would define what happened two years ago after literally stone cold silence for five years, no conversation. I would never have thought of Collins name again. Honestly, he probably wouldn’t have mine other than God intervening at the right time and reconnecting us. But I’m grateful for his partnership. But in this journey to have some perspective shift, when you work with people that live in a different culture than you every day, your perspective just shifts. And I praise God for His grace in allowing us to see that in different ways, that before we didn’t and the psalmist I was reading the last few days is Psalm 48, and it just says like your name oh God, your praise reaches to the ends of the earth, and sometimes the task can seem a little overwhelming. Thinking about Thailand and the Philippines and Russia and Ukraine and and Uganda and the challenges and then looking at, you know, the United States. And that has been a reminder to me that he sees way further than we see. And he’s a creator of it all. And his praise will be made known across the world. And so that’s been a great refresher for me to know that, yeah, there are challenges out there and yes, there’s a urgency to go show the gospel. But but his creation is going to sing his praise, whether we do or not.

John Coleman: It’s a great word, guys. And look, it’s been awesome to learn about Pureflow. Tom, it’s been great to learn about your investment strategy. Great testimony to the marketplace and to faith driven investor broadly bringing folks together like this. And we wish you great luck. I know the prayers of the community are with you, as well as a number of other good capital partners out there, hopefully as you encounter the next wave of growth. And we’re grateful for your time today. Thanks for joining us.

Luke Roush: Thanks, Colin. Thanks, Jared. Thanks, Tom.

Collin Wenrich: Thank you, guys, for having us.

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Patrick Fisher founded Creation Investments in 2007, leaving JPMorgan with a vision to find profitable solutions to difficult social and environmental challenges. As Founder and Managing Partner of Creation Investments Capital Management, Patrick and his team oversee $1.8 billion in assets under management with investments in financial services for the unbanked, supporting international development, poverty eradication, and wealth creation.

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast. This is a special edition, if you listen to this semi-regular, you’ll know that all too often say this is a special edition of the Faith Driven Investor podcast. Maybe it’s because I think they’re all really special and they are today, in particular because microfinance, Christ centered economic development, human flourishing through capital markets and in the marketplace is a great passion of mine, and I can think of few guests that kind of embody all of that altogether. Dan Patrick Fischer He runs a fund that invest in microfinance. And so I’ve had the great privilege and honor of getting to know Patrick. Over the years, I’ve been involved in microfinance. I’m not an expert. I did get a chance to serve on the Board of Hope International, and so many of our audience will know Peter Greer and think highly of him. And I was on long enough to get a working knowledge of how effective it is to alleviate financial and spiritual poverty, but not long enough to be an expert, which is why we’ve got Patrick on board, who brings us all together. How do you think about an investment fund? How do you think about emerging markets? How do you think about the underlying investment of microfinance as it deals with poverty alleviation? All these things together and throwing the other thing I care about too, which is Faith driven entrepreneurs ship and is an itinerary because he’s launched his fund. So. Patrick, welcome to the program.

Patrick Fisher: Thanks. Thanks, Henry. Really great to be here.

Henry Kaestner: So we’re going to get into law here. We’re going to talk about the pros and cons of microfinance. We’re going to ask you about the things you’ve learned and how your working theory of change has changed over time. Some of your experiences love to hear some of the stories. But before we do all of that, we do like to get an autobiographical sketch of Who’s our guest? Who are you? Where do you come from?

Patrick Fisher: Sure. Well, I was born and raised in Southern California. My father left right before I was born. So my mom, a single mom, had to raise my older brother and me and L.A. and Orange County. I went into Boy Scouts as a young kid, and that’s where I came to faith. My scoutmaster brought so many kids to Faith Cliff Mauvais, which I’m really grateful for his ministry in that role. He also gave me my first job as a landscaper using, I guess, cheap labor, cheap kid labor, but also it as a great way to administer to kids and build them up and equip them for life. So after going through high school, I got a scholarship to go to a Catholic high school in Southern California, and I went to Notre Dame in Indiana and studied philosophy, theology as well as computer science, and came to Chicago and got a job at a bank. I was part of JPMorgan for about seven years, eight years, worked overseas in China and came back to the US actually during the start of the epidemic in 2003. And that’s really when all the lights started to come on about economic development, the use of capitalism and business and investment capital to achieve missional goals. I finished my MBA at Northwestern at night and continue my career at Morgan until taking a leave of absence actually from a bank to become an executive pastor at my local church here in Chicago, which is a church plant, helped launch a couple other church campuses within the Chicago area. And at that time had already been incubating the idea of creation investments, which is when I formally left both JPMorgan and the church in 2007 to start creation investments. So it’s been quite a ride. I’ve got amazing and beautiful wife and we’ve been married for 14 years now. We’ve got three young kids, got a dog named Bacon, and we live in the city of Chicago. We very much believe in living in the city, and they just really haven’t had an amazing life.

Henry Kaestner: So that’s amazing to me. And yes, we’re going to get to the idea of the lights coming on. But your dog’s name bacon. I have a dog. We’ve got a dog is a Newfoundland. His name is Gus. If I were to say something smells like Gus, everybody here knows exactly what I’m talking about. And that’s not necessarily a beautiful thing when you say it smells like bacon. Do people think about bacon or the dog?

Patrick Fisher: Probably the actual food. No, he’s a he’s a great dog. Know, being a philosophy and theology major, I have a love of sort of the writers and great thinkers, so I wanted to name our kids, you know? Oh, but my wife wouldn’t allow me to. Exactly. Sir Francis Bacon. But it works both ways, which I hope is how all of us, you know where we were able to laugh, but also allude to sort of bigger ideas. Bacon is what my wife allowed me to name our dog, not our journalism.

Henry Kaestner: There’s nothing deeper theologically about Gus talking about the lights coming on, though. Talk to us about that experience as you are thinking about starting creation. And so fast forward a bit. How big is creation today? And then, yeah, we’re going to go right back into what do you mean by the lights coming on? And then how do you say, Well, you know, this is the opportunity?

Patrick Fisher: Yeah. I mean, you know, by God’s grace, we’ve been in existence for 15 years now. We managed $1.6 billion in assets, and they’re all dedicated to impact ESG investing in financial inclusion, which is this bigger category. Microfinance is a part of it, but a bigger category. How do you provide financial services to the poor, the unbanked, the underbanked women? How do you give them access to capital savings insurance payment tools all to help them manage risk and get access to the productive means of our day to increase income and improve livelihood? So that’s the mission of creation. We have offices in Mexico City and Bangalore and through those offices in our office here in Chicago. We make investments and own banks, non-bank finance companies, insurance companies, payments companies, fintech tech enabled businesses that makes these kinds of investments and loans to the marginalized. So yeah, that’s I mean where we are, we’re scc registered, and that’s a big part of one of my messages to Faith Driven Investor use the structures that exist, but within that do it differently. And that’s a way to get to scale because the problems we’re trying to deal with are massive and require scale and require the use of all the tools we have available to achieve true kingdom and scalable impact.

Henry Kaestner: What was it that you saw during your time at JPMorgan, where he said, OK, there’s a problem. Any good entrepreneur is about solving a problem and bringing something closer to the way the Kingdom of God might look like? Was there a formative experience where he said, OK, this is where I know that I’m called to do, and here’s why.

Patrick Fisher: Yeah, it’s a very much so. When I lived in China, I was living in Beijing. At the time, JPMorgan Morgan was getting a local bank license, which allowed us to make local currency loans in renminbi and going through that licensing process and realizing, you know, JP Morgan was going to make loans of the equivalent of one hundred million two hundred million dollars to large corporations. Yet on my way back and forth between the regulator and our offices, you’d pass by a little shop after little shop, after a little shop that had no access to a bank loan. And after coming back, I started to read about microfinance. I started to read about all the NGOs, in particular Christian NGOs that were doing phenomenal work and making small loans of poor. And that’s really when the connection came in. Of all the mission trips, all the work we’ve done, all the experiences I’ve had in particular in high poverty situations and to see how banking as a core service use of capitalism could be leveraged to that very problem. And so I wrote in my journal in two thousand three. I love Jesus and I love capitalism. You know, how do we put these together? And I happen to be somebody who’s sort of a bank nerd just like the rest of my team. For some reason, we love banks. So that became a very obvious place to say, how do we use our our interest or curiosity in banking and our love of God to propel us down this road to read every book, went to every conference, met all the people from World Vision, from Opportunity International, and really started to talk to them about the difference in paradigm between giving as a mechanism to achieve these goals versus using investment capital and why investment capital had some attributes to it that would first allow it to scale. Because we all know there is an order of magnitude of investment capital than there will ever be on the charitable side to. How do we free up the charitable money to do only what charitable money can do, which is, you know, evangelism and church and other kinds of things without a business model. But how do you tap in and leverage investment capital for mission driven investments that really do have a true business model and a track record? And how do we deal with the risk return within that? And so over time, just start to develop this and other funds were coming about at that time. But there is a real need in private equity in particular, and that’s what fit my background and the background of my team members. That seemed like a pretty obvious place to put our time and energy.

Henry Kaestner: So when you talk about private equity, can I say that there’s some level of an entrepreneurial ecosystem of folks that are trying to solve problems in their local context, but they themselves need capital to, in turn provide capital to their customers? Am I getting that right?

Patrick Fisher: Yeah, yeah. I think capital is the ultimate phrase here. I mean, we all know there are certain kinds of capital, there’s financial money, there’s intellectual capital, there’s social capital, there’s spiritual capital. God is the ultimate investor of all of this has given us all different kinds of capital to use. So how do we involve ourselves? Seize our intellectual capital to channel financial capital to those that need it? Unfortunately, poverty in America is an incredibly complicated thing. Know I’d say by and large, when you go to rural India, let’s say it. Very uncomplicated, if there is a lack of financial capital in those markets where you wish a $200 loan could affect you in major ways, poverty on the south side of Chicago and effectuate job creation and economic development. $200 loan can actually do that in certain places in the world, where in other places they’re more complicated problems that need to be untangled and worked on, not just plugging a financial capital hole. So then that’s where the whole spectrum of charitable capital and financial capital really have a role to play in all of this. But what we’re narrowly focused on is where we can use pension funds, insurance, high net worth family assets, capital where there are going to be investing it anyhow. But how do you invest it in a bank that is specifically targeting low income women? A lot like my mom, who was the working poor working to provide for a family as a single mom? How do we get behind those entrepreneurs who are forced to be entrepreneurs but don’t have access to the productive means of their day and the Bible and biblical times? There was land access to land, which is why cleaning was so important for gleaning even involved work and effort. And there’s something beautiful about that. But how do we give people capital so that they can get a return on their effort? And that’s, you know, ultimately in something we’ve talked about probably years ago, Henry might have forgotten. But when I read Isaiah, 65, to me, that was really when it all came together. And for those like all of us who might not know Isaiah sixty five by heart. Just to recap, in the middle of the chapter, Isaiah is saying he sees the new heaven in the new Earth. God is declaring the new heaven in the new Earth, and this is what it will look like, and it will look like a person is able to plant in a field and they eat of the harvest and a person builds a house and they live in that house. It will no longer be that somebody builds a house and a different person lives there, or a different person gets to eat on the field. And that no longer will children be born into misfortune, and that if that’s the new heaven and newer that’s really being depicted, it’s really one of empowerment. How do you help somebody build their own house where they live in it? And how do you help them plan to feel where they get the upside of the production? And that ultimately is what alone and other kinds of financial services help people tap into. And we actually make affordable housing loans. You know, our newest portfolio company, Vastu, has now over $400 million of $10000 apiece single family loans to help people construct their own home. And, you know, it’s just unbelievable. Company 40 percent loan to value. So from a banker standpoint, very low risk. Yeah, we have a point four percent delinquency rate. So again, very low risk, we’re growing at almost 100 percent per year, which makes it a very exciting investment proposition, profitable company. But to be helping, you know, hundreds of thousands of people build their own home and living, it is very much a fulfillment of Isaiah, 65.

Henry Kaestner: So I love that passage. And now we’re going to use Isaiah, 65, much more freely. And I may or may not give you credit for it. Now I will. I will. I think that that’s really important. I think that we all are wondering what the new heavens and the Earth look like. And I I know that I’ve read Isaiah, 65, but I don’t think through that context. So that’s a blessing for me. The question for you on how you think about and you can correct me if I’m using my terminology and the concepts wrong. But a lot of times I think the general concept of what you’re talking about being the fortune at the bottom end of the pyramid and having spent some time with microfinance, I know that in many communities you’ve got usurious money lenders who are out there, and the way that people are able to access capital is just really just exacerbates poverty. So if somebody is borrowing money at what effectively might be a couple hundred percent on an annualized basis, right? You borrow five at the beginning of the week and you go up six back at the end of the week and it compounds pretty quickly when you do that as an entrepreneur. What’s the temptation to come in and say, Well, we’re not going to charge 100 percent annualized basis, but we’re going to charge 60 or 70 percent. We’re still 30 or 40 percent under. But the market is, you know, because users money lenders have been out forever. There’s clearly a big enough market and we can make a lot of money and still be a third cheaper. How do you process that conceptually? And then presumably, as you invest in these different institutions yourselves, you have to have some sort of guidelines because some of the companies you’re investing in might also be tempted to have something less usurious, but still in a way that doesn’t allow the poor to really escape. This cycle of poverty, how do you process that?

Patrick Fisher: Yeah. No great questions. I mean, first and foremost, the money lenders are the people that we want to put out of business through our activity. And the best way to do that, I feel, is through the power of markets. There always be room and importance for good regulation and laws and consumer protection. And those are the markets we invest in that have good consumer protection and laws against serious money lending. But it’s one of the reasons why we focus on regulated banking institutions that comply with not only the consumer protection requirements, but also a part of our own code of ethics and policies about client protection principles where under what was called the smart campaign, but also using capital to drive interest rates down and drive access and capital is the best way of doing that introduction of competition. And this goes back to the sort of the love of capitalism and there always needs to be. Maybe before I go on sort of a healthy sense of distrust of any system, any human system, there should be a sense of distrust of socialism, as well as a sense of distrust of capitalism. We shouldn’t, you know, anticipate that these systems will create in a fallen world some perfect utopia. There’ll always be a tendency toward abuse or some form of misuse. But capitalism is the best system we have and has demonstrated results over and over again of having a unique ability to allow people to bring whatever capital they have to the system and participate as equals and to participate once given access to further levels of capital to generate their own returns on that. So what we really like to see is where Christians in particular get off the sidelines and get into the mess of what these situations are. And by bringing their capital in, it drives the costs of money down. By using technology, it drives the cost of client acquisition, client transaction costs, collection costs down, increasing transparency drives risk costs down. So all those things are really good for the business model. We actually make way more money as just a pure financial investment by having lower interest rates and sticky customer relationships, customers that not only have a willingness to repay but such excess returns in their own business that they want to borrow more for the next loan because of the returns they’re able to generate. It’s often why you see, even if we look around Chicago, you know, title loans, which are pretty dodgy, payday lending, you know, they’re always these kind of one or two stop to location places. You know, JPMorgan’s got trillions of dollars under assets. You don’t get the trillions of dollars and that much market value by trying to eke out a couple more percent on folks. You do it by building enterprise value, by helping people flourish, because then they won’t only need or want a home loan. They’ll also need a small business loan or an education loan for their children. Don’t need insurance on top of that. That’s really what I see how the financial, social, spiritual returns all come in, especially when you’re acting like an equity owner, thereby really delivering excellent value to the client by lowering rates, increasing access it leads to. It is a direct contributor to our financial returns, and that’s why I love the alignment. But I would say with all things, everyone should wrestle with what it means to lend money, what it means to charge a customer or whatever business you’re in. How do you judge a fair price? How do you judge a fair wage? And that’s something we rely on the Holy Spirit to work in us and to help us use our wisdom. You do that in community, but also we do have this functioning market. When a market does function, it by definition will help you price something. The laws of supply and demand really do help you find a price, and that essentially leads to what is now a burgeoning market of individuals who now hundreds and hundreds of millions of people now have access to financial services that didn’t, and they’ve come out of the shadow banks and into formal regulated opportunities. And that’s a whole part of the mission. That’s why it’s called financial inclusion, bringing people into the systems that we get to use and benefit from every day.

Henry Kaestner: So I’d love for you to talk to us a little bit more about that. You said at the outset, of course, that financial inclusion is much more than just microfinance, though that that’s an element. And you mentioned that this home fund. Give us some more examples of the types of investments you make and kind of the larger cornucopia, if you will, of financial inclusion. Sure.

Patrick Fisher: So we’re the largest owner of a licensed bank in Mexico called Tim Keller Amos. It’s the number two in terms of market penetration micro lender, so they do three hundred dollar loans almost exclusively to women in Mexico.

Henry Kaestner: Well, I love the name and this is me dropping that. I know you’re still there. Yeah, but you know, we believe in you, right?

Patrick Fisher: Is that exactly what a great name? Yeah, I agree. From that core micro loan of three hundred dollars, they’ve also added through their app the ability to make utility payments, the ability to save in a savings account and have access to a savings account and Braun Insurance. We do life insurance health insurance now, and that’s been a big draw. That creation investments brought to the company helped them expand. Also in Mexico, we’re investors in a company called Plus Corp., which does $100000 to $500000 small business loans and leases, mainly for equipment. Somebody needs to buy a machine. We have a fleet for people need trucks, all the small business needs. So we’re involved in the one hundred thousand dollar loans. We’re investors in several different companies in India, one being that the affordable housing finance lender that I mentioned, Vastu, another one which has become a unicorn over the past couple of years, have been our best investment ever. But a company called Of Business, which has a technology platform that allows small businesses to go online and order basic materials, lumber, steel, concrete bags of concrete. And so this company handles the ordering the logistics to get 10 bags of concrete delivered to your small business. And then they’ll also provide the financing they’ll give you that, you know, a couple thousand dollars you need for your order of lumber for the 90 day period in which you’re using that lumber to build furniture, for example. And that business has grown dramatically, and COVID has only accelerated all of the digital adoption and efforts there. We’ve been involved in used vehicle finance, so we do a lot of two, three and four wheel vehicles. So if you know your motorbikes and took trucks and all in Southeast Asia, still in Sri Lanka, as well as Cambodia and Thailand, we’ve done other kinds of products like pure insurance. So we have a company called Afler Insurance, which is in four different countries in South America and Mexico, Brazil, Peru and Chile. And they provide a variety of different kinds of insurance products, including now mortgage insurance. You know, you don’t think about the role that mortgage insurance plays even here in America to help people get access to that loan. The banks wouldn’t lend money to a first time homebuyer, typically if there wasn’t some form of insurance or other kind of securitization pool or a Fannie Mae or all these systems that we really take for granted. But they’re what’s required there, the pipes that are required to be able to channel money to these underbanked folks. And maybe with that, I’ll just use our last example, which is where the majority owner of a company in India called the Greedy Capital and the variety really is building the pipes for the entire debt capital markets in India. They have a digital business called Credit Avenue, which allows for institutional money to flow and make a digital debt market. But they also have their own balance sheet in which they channel capital to lenders like a micro lender, like a fusion microfinance or an education finance that’s doing small ticket loans to help pay for school fees. Because school fees in the majority of the world are due upfront before you start school, you have to pay as you go, and that just shows you how much capital is still needed to help our whole globe really take a big step up in economic development. So those are a few of our companies.

Henry Kaestner: So this next question to ask you is going to sound, by the way, I ask it to be prescriptive or presumptuous. It’s not meant to be that way because what you’re able to do in the marketplace in terms of offering up financial inclusion is very much about human flourishing. And yet I also know, of course, that you’re very much motivated by your Christian faith. What are opportunities that you see on the ground to be able to address not just financial piety, which is huge issue to be clear, but also maybe to partner with others. But what does it look like also in some of these markets to be able to address spiritual poverty as well? Are there opportunities that you see that or is that just, hey, actually, you know, maybe didn’t catch me at the beginning? I said that there are opportunities for charitable capital, and that’s an evangelism in church planning. And so I’m not meant to say be judgmental because if you say no, we don’t do it, that’s the wrong answer. Not at all. But do you see operating? How do you process that?

Patrick Fisher: Yeah. Well, I mean, I would say, first and foremost, you start with your own calling as a teenager as coming to say that I was, I did. Street witnessing in Southern California, so on Friday nights, you know, so so, you know, God is fed a desire to evangelize in my own heart and hopefully a gift in that. And so doing that through my own personal work here at the firm with every employee that I have here and my partners and and our team members, as well as on the boards I sit in and the regulators that I get to meet with, and I’ve been invited to speak at the Vatican against Jesus

Henry Kaestner: of regulators

Patrick Fisher: to death. He does, you know, interestingly, when we need to sign forms and certain parts of Southeast Asia, I have to sign Patrick Fischer Comma Christian comma here by saying as a director, so it’s very much there on my director forms as well. But with that, I think there’s just something that really needs to be communicated about how we work with our management teams, too. And we have CEOs in all of these businesses, men and women that are amazing leaders and teaching them how to lead with their faith and to communicate our own faith. Now, of course, we have Hindu and Muslim and Christian and Protestant Christians, Catholic Christians, we’ve all sorts of and atheists, management teams as well. So this is a great opportunity for them to know why we do what we do and who we are. And I’ve always very much believe that Christians should be leaders in the impact investing space. I mean, nobody should be able to put all these components better than a Christian, especially creation care the environment who should care more. You know, somebody that sort of says, we’re here randomly and we evolve with no real design. Why would you know we’re just a bunch of atoms now? It should be people that really believe that we have a creator, and that’s part of the name. Creation is the creation of opportunities, the sense of that we’ve been created to do something and that we need to care for all of God’s creation, as well as wealth being created, not exchanged. And that’s one of the big misnomer is that we try to deal with. But with that, there is a spiritual element, of course, that goes into our work. And I think it goes back to some of the principles even Martin Luther talked about with with the Cobbler and his example, which I’m sure you’re very familiar of, which is how does a cobbler best represent Christ? Is it by putting a cross on every shoe or is it just making really good shoes? And Luther says it’s by making really good shoes and maybe a misattributed that maybe it’s somebody else, but I led the group. We’re going to go

Henry Kaestner: with it offered this thing.

Patrick Fisher: Yeah. So it’s about being excellent at what we do in financial services, knowing we’re going to work with diverse teams, knowing we’re motivated by our faith and knowing the best way to honor God and inspire others is by creating the best financial institutions that will really be a light. Now through that, it gives us a platform and I’ve had a platform to speak to our investors. Some of our investors just see this as one of the best opportunities to make a financial return because we’re in emerging markets where in high growth financial services has a great track record behind it. Our own track record is fantastic. But there’s an opportunity to say that’s not all we’re doing here. We’re a part of the idea. Sixty five that we talked about earlier and we’re doing it motivated out of our faith. That doesn’t lead to any fuzzy thinking, though, of why we do or how we do what we do with rigor. But also, you know, we have and will continue to give to things like city to city and other kinds of churches that are in and involved in these areas to strengthen the local church around where our investments are. We give to other NGOs as well that are doing health care, education, spiritual evangelism and church and other kinds of community work as a way to know what we do has a very specific focus, but clearly for a whole human flourishing, we’re going to need all sorts of groups to be involved and address a particular community for the resources that they need and the sharing of the gospel.

Henry Kaestner: So I love that perspective. I think back to an NPR report that I heard recently. I actually went online. I found it, but it was probably 10 years ago, and they’re doing a 40 year retrospective on the Green Revolution in India. And they talked about how, you know, 40 or 50 years ago, people weren’t talking about the climate as much. They were talking about worldwide starvation. That was the big problem. People in India are going to starve. And so the Green Revolution came about increasing crop yields, and they were looking at doing this retrospective and I thought was very curious the way they did it. They looked back and said, you know, with the advent of pesticides and water and financial tools, the crop yields have absolutely increased. But 40 years on now, instead of using two bags of pesticide per hectare, you get to use 20 instead of drawing 20 feet for water. You’ve got to draw 80. And because of the proliferation of that vehicle, some number of Indian farmers have gotten overextended, and depression and even suicide have become rampant. You know, it’s kind of a cautionary tale. And it ignores the fact that, you know, millions of people didn’t starve to be clear. Many more millions of people were saved from starvation then and having mental illness and suicide. But as I’m listening to this, I thought, Oh my goodness, this was great in terms of addressing financial poverty. But if the church had been able to have this thoughtful partnership in there. These are people may come to understand that not only am I not concerned, but there actually a guy that really loves me and gave me this gift of life. And so I love to hear that where you can’t necessarily do the type of things that you have a heart for in evangelism through the model, you’re able to supplement some of those things by knowing the communities in which you serve. In some cases, it means working with church planners and doing it holistically, but with an idea that there is an opportunity to alleviate spiritual poverty in addition to financial poverty. And I suppose that some part of that includes addressing the the spiritual poverty we all have inside ourselves, too.

Patrick Fisher: Yeah, I mean, I think the farmers in India and I’ll bring up a couple of different points here. I hope I can be articulate, but one is, yeah, it’s been an amazing revolution that it’s occurred within India and China as well. I mean, hundreds of millions of people over the last decades have moved from extreme poverty now into being low income, which is even out of the poverty level, which is unbelievable and wonderful from a reduction of human suffering. With that comes, of course, you’ll always get excesses. And it’s again one of the things we want to drive out through our operations. You know, there was a survey done even 10 years ago looking at Indian farmers and prior to financial services being offered. There are about 11000 suicides a year within the Indian farmer community after financial services, those with financial services from a regulated institution. There were 30 suicides total. Wow. So the reason I bring that up, and it’s not to say that, you know again, that these are magic bullet solutions to all you know alone can only do so much, but it does impart dignity and hope in a very powerful way. Now it’s incomplete without the whole picture of Jesus, but it’s the cup of cold water in Jesus name. It’s the opportunity to play a role in your community. It’s the path out of dealing with the local money lender. You know, it’s really substantial. And then the crop increases to me. Is it getting back to even the why I named the firm creation to begin with is exactly the point that there’s always been a fear that by investing in social enterprise that deals with poverty or the poor, that you’ll be extracting rents essentially from the poorer that we make money because they lost money. But the point of planting seeds and knowing that you can plant and have a harvest that yields a normal yield, or five fold or 10 fold or biblically 100 fold. Now how do you account for that game? And how should it be split? And that gain is the essential framework that God put into our whole world system is that, he adds, increase and that wealth can really be created. It’s not just exchanged. And so how do we provide financial capital and not just financial capital, but other kinds of services? I mentioned this company of business on logistics and ordering and inventory management. We do the same in agriculture. Our latest company, Rusty Amundi, does a ton within the silk and cotton supply chains in India. And that’s a very interesting case because those supply chains are dominated at different points by Hindu or Muslim communities. The Muslim community are primarily weavers within silk, but they don’t trust the other Hindu communities by and large. So how do you have an intermediary help those two communities trade with one another, their inputs and outputs so there can be an increase of wealth for both sides? And you do that through transparency, through financial services, by injecting liquidity technology so that there’s trust and that’s what this company recombined. Mandi has done an amazing, amazing ways. But it all goes back to that metaphor of planting and really trying to create excessive yields because the Earth and we have a god of abundance who wants to have excessive yields. But the economic yields are not the only ones here. There are other things happening, but just the core financial service alone actually does. It’s not a complete evangelism, but there’s so much dignity and hope that’s in part of that is very easily measured just through that sort of farmer suicide ratio.

Henry Kaestner: So we’re coming down to the end of the podcast. And just so, you know, if you’ve listened to podcast before we get to, we’re going to finish this up by asking you a verse. Or something that you feel or understand that guy speaking to you through his word about two things you come through and let’s hit them in rapid fire, kind of like the ESPN 30 for 30 at the end, just kind of rapid fire. First one is I love the fact you brought the parable sower in. It’s my favorite passage actually in the Bible on investments. Not the parable of the talents is not even it when a treasure in heaven where moss and rice don’t destroy, it’s actually the 36.0, as you mentioned. And the thing that holds us back from that 3500 is you’ve gone through the things like that. The sea has been picked down, and all this stuff with the final one is the worries of the world and the deceitfulness of riches as folks come out of poverty and are looking at are now in the low income. At what point in time is there opportunities to have kind of like a crown? I’d see I’m being too prescriptive, but you know, a crown, financial type of thing like all these things you thought you might have, you know, in the emerging consumer class. And to be clear, Sovereign’s Capital, which I co-founded, is involved in the emerging middle class and it’s based on a consumer economy. And yet we know that the worries of the world and the deceitfulness of riches can hold us back from that 30, 60 100. At what point in time does the people that are coming out of poverty come to realize some financial wisdom? That’s above the context in the scope of what you do with your fund, but I’m curious on any thoughts you have on that as these folks start getting money.

Patrick Fisher: Yeah, I love it. I mean, I think essentially and you mentioned hope and hope and again, World Vision or are working in the hardest places in the world that are fundamentally on investable investment capital won’t go there. There’s just too many risks. But as a donor, we should take that risk essentially by the money already being given away. It doesn’t require a return. Put it in these hard plays that make it work. Give these people access as that access increases and as people are more and more well-off, they start to put their excess income into protein. So they’re stronger education, health care into their children, really into better homes, which lead to health outcomes that are great. But then they move toward some more business opportunities and consumables, so use vehicle televisions, access to internet and information. And as you move up that chain, there’s now going to be a push toward how do we offer wealth services, wealth management services for our client, who 10 or 20 years ago made less than a couple of dollars a day and now has access income to invest for the future? And with that, our financial literacy courses that we offer through our institutions, there’s financial literacy and training also needs to adjust because financial literacy for someone who’s basically on the margins of poverty and survival needs to be about how do loans work, how to use it for productive purposes, how to repay, how to save, how to become more resourceful and use the capital over time. It needs to start dealing with the other issues that money provides and brings out, which are issues of the heart and of abundance. And what do I do with my money? How do I cultivate a generous giving heart and we’ve all had to go through that in our own journeys? And that will just naturally happen as we move along, but that’s definitely the goal.

Henry Kaestner: OK, last question before we get to the scripture, and it’s as follows You start in 2017, you talked about. Twenty seven. What are and you knew enough in 2007 because you talked about running your journal in 2003, but you knew enough in 2007. Here’s a problem. I’m called into it. And yet, undoubtedly, over the last 15 years, you’ve learned a lot and you spent a ton of time in these different countries. Can you talk to us briefly about the lessons you’ve learned and the things it may not have been as you thought they would be? When you first got into this, because most of the listeners this podcast are starting to get involved in frontier in emerging markets and thinking, You know, what can I expect? I’m feel drawn into it. I see the biblical mandate, the opportunity to participate in what God is doing in the world. But what’s something you’ve learned over the last 15 years that maybe you didn’t expect?

Patrick Fisher: Yeah. Well, I would say a few things, but maybe like if anyone’s going to do a construction project on their house, you know, anticipated it’ll take twice as long and cost twice as much. So it is just sort of anticipate and normalized disruption failure even and really try to strip out that really easy to slip in notion that if it’s successful, that means God’s in it. And I tried to debunk that every time people say, Wow, you know what you’ve done, accretions gone so well and been so successful. It’s clear God’s in it to try to wave my hands and say no way, you know, God was in it. If we failed, if we failed at year one or year five or had to shut down, God was in it because my job was to follow him every day and do the job that he asked me to do that day. And that’s still the case today. The numbers may have changed. And the details are different, but it’s very much the same calling, so that to me is a fundamental. If you focus on that, then all the rest can come and go and you’ll be completely grounded in what is, you know, especially when dealing with emerging markets. But even just look over the last 15 years from a global financial crisis now to COVID and in between, we had a bank in Russia in 2014, when the first Ukraine crisis and issues were going on. We went through demonetization in India, so currencies and out of pandemic. I think what what remains to be true is that the mission is unbelievable and that our work has a real, tangible impact. I’ve never believed in financial services for the poor more. It’s never been more investable. But what I also know is that just it’s constantly changing and complicated world. And if you put your identity into anything other than being a servant and following God and doing the job we asked you to do, you’re going to get away, of course. Real quick.

Henry Kaestner: OK, well said. I lied. I’ve got one more before we close with scripture, and that is that the listeners to this podcast are going to go the whole spectrum. They’re going be qualified purchasers, accredited investors, folks working for foundations, endowments, hopefully right down to the word owner. Might some number of the people listening to this and this is not a fun pitch, but some number of people are going to listen. It’s like, Oh my goodness, I’ve got to be an LP in something like this, and that’s awesome. Some other number won’t be able to. Or maybe they can. How would you speak to a listener in this audience that says, Oh my goodness, I get it. I want to invest in financial inclusion? What’s the spectrum of what’s available to them as they are called to participate?

Patrick Fisher: Yeah, great question. I mean, again, we still continue to give out of a charitable bucket to financial services for the poor, in particular in frontier markets. So that’s the Congo and Haiti and, you know, really almost failed states where, you know, it’s the ultimate of risk. But you’re thrilled that Christians in particular are they’re leading the charge and helping build the foundation such that as those countries and communities grow, that really you could utilize them this next bucket of investment capital and within the investment capital world, there are a number of different options. Obviously, creation is one that’s focused on financial inclusion. Again, we’re only open and eligible for qualified investors, accredited investors because we’re scc regulated and under private funds and private placement rules. But within that, there are other firms that offer private credit, private equity opportunities and more and more. We’ll see public investment vehicles allow for this. So there’s a whole spectrum of what’s available. I think most people tend to fix their capital toward a geography of Tennessee. So if you’re hired as for Africa, it’s going to end up being a donation to one of the great charities doing great work. If your heart is for a place like India, there are a number of amazing investment opportunities there as well. And I’m thrilled that some of our investors obviously are very large institutions, but others that really believe this is the best social return they can generate. Because the use of investment capital and the structure that business and shareholding naturally provides actually creates better impact than a charitable structure. And I don’t like to compare one versus the other in terms of effectiveness. It’s really all good, but I’m really excited about where investment capital can go.

Henry Kaestner: Outstanding. What’s something you’re hearing from God in this word? Maybe it’s today. Maybe is this week. Maybe it’s recently, but how is he speaking to you?

Patrick Fisher: Yeah. I mean, I think for me, the you know, it’s the come with me over to the other side, Praxis scripture, where you see Jesus challenging his disciples to take the next step with him. Me and my own leadership journey is what made us quote unquote successful or at least survive for the first many years was being scrappy, you know, really kind of a DIY mentality. Now that sort of early scrappiness startup mentality needs to shift into how do you build structures, policies, procedures, scale layers of teams really to manage more and more that we have coming in? And that’s a really exciting but scary calling to come to the next kind of level of leadership. And I know and I’m very familiar with the founders trap and really trying to buck that. So it really is trusting God that he’ll continue to equip me as a leader to hire and find great people because that’s always the fear. Whether you know you work in a church or a charity, or will God bring the next people that we’re going to need for the future and to trust that he will and that will be ready to empower them and, you know, in the right seats on the bus? When they come, so that’s really the word come with me to the other side. Yeah.

Henry Kaestner: Patrick, thank you. Very grateful.

Patrick Fisher: Yeah. Always great to be with you, Henry. Thanks for all you’re doing for faith driven entrepreneurs and investors.

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Today’s episode takes us to jail. Well…not exactly. But we are interviewing a man who owns and operates a business that is run out of a high-security prison. 

His name is Pete Ochs, and in addition to working as founder and chairman of an impact investing company, he’s also working to make Hutchinson Correctional Facility in Kansas the best prison in America. How? Well, we’ll let him tell you…

Pete is an expert when it comes to multiple bottom line investing—something many Faith Driven Investors are familiar with—and in this episode, he walked us through what that means, what it can look like, and how others can apply this approach to their own lives.

As always, thanks for listening.

Useful Links:

Jailhouse Business of Generosity

Inmate Confesses God’s Love at Seat King

Work as Flourishing in Prison

Enterprise Stewardship

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Today’s guest is one we’ve been excited about for a long time. Bob Doll is a leader in the faith-driven investing movement from his work at Oppenheimer Funds, Merrill Lynch, BlackRock, and now, Nuveen. 

You may have seen him on one of his frequent appearances on CNBC, and we were honored to have Bob join us last summer for the Faith Driven Investing gathering in Utah. The work he’s been doing for the best few decades has been instrumental in shaping the conversation this website is stewarding.

We owe a lot to Bob Doll and we’re excited to share the hard-earned wisdom his experience has yielded. As always, thanks for listening.

Useful Links:

Bob Doll’s 10 Predictions for 2020

Bob Doll on Faith and Finances

Maintaining a Christ-Like Attitude with Bob Doll

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 [00:02:11] Bob, we’re very grateful to have you on the show today. I hope we had time to cover as much of your journey as we possibly can, because I think it’s a really powerful one. I know it’s a really powerful one. I want to start with you, Tom. On Wall Street, some of audiences are retail investors are going to be familiar with Merrill Lynch, acid massage men and BlackRock in a lot of the places that you’ve been. But as we get started. Walk us through your journey and maybe some of the size and scope of the funds that you’ve been involved with, because I think that probably most of our listeners have interacted with some of the products that you and your teams have created at some point in time all along the way.

 

Bob [00:02:44] Yeah. First of all, thanks for having me on my professional journey. Henry started when I graduated from business school in 1980, and since then I’ve been on Wall Street. So next year we number forty hard to believe. Like many in this business, I started as an analyst, equity research analyst, disect ing companies figuring out what makes them tick. They make their money, got a break a couple of years and to be a junior portfolio manager. And that was my objective to manage money. I’ve managed U.S. large cap equities all my career at Citicorp and then at the Oppenheimer Funds where I did that, but also became CIO of Equities Chief Investment Office for the whole firm, was recruited to Merrill Lynch investment managers in 1999 and a couple of years became CEO of that business all along continuing to manage money. That was my trade. Always has been Lord knows, but probably always will be. BlackRock bought Merrill Lynch investment managers half a dozen years in and I worked there another half dozen years. And now I’m Nuveen, where I’m chief equity strategist. And guess what? A portfolio manager. So I spend time analyzing companies, creating portfolios, talking about markets, if you will, waving the flag for the firms I work for in the media and in the press more generally at the U.S. about scope. Again, all U.S. large cap, my team, my individual team and our peak, we managed $42 billion. But as CIO, I was responsible for over a trillion dollars of equity assets. And the firm BlackRock was the peak in assets of four trillion dollars under management. So it was a fair number of dollars to slosh around and be a steward of over those years. So it’s been a great ride.

 

Henry [00:04:33] Oh, my goodness. That’s right. I knew that when we were talking about Merrill Lynch asset management in some of these funds that I had not expected that it was as big as that. Trillion dollars is a lot of money to be responsible for. Tell me when a lot of our listeners think about Wall Street or at least let me tell you how I used to think that Wall Street, my introduction to Wall Street came back from I guess it was late 80s early 90s in the movie Wall Street. Michael Douglas in is Gooding Greed cuts through and captures the American spirit. And that, of course, is Bud Fox and the two phones. And it wasn’t necessarily a place that would be known for maybe family values. You’ve been a Christian on Wall Street for a long time. Where are some lessons that you’ve learned from your time on Wall Street as a faith driven employee, faith driven leader, faith driven manager, and a guy that’s driven by his faith and yet has real responsibility to run lots of people’s money?

 

Bob [00:05:27] Absolutely fantastic. I wouldn’t trade it for anything. I think like everybody who’s a follower of Jesus Christ, you know, there are issues that come up that are easy to deal with and some that are harder. I think one of the beautiful things that I’ve enjoyed is the different types of people that I run into, other real strong believers that I can learn from and fellowship with some people who are totally and this will be the norm, totally apathetic to the things of God. Others respectful of the fact that somebody is a believer. And then, of course, you have those who under certain circumstances, particularly when you bring it to work, quote unquote, get a bit antagonistic. But as you point out, watching the movie, yeah, there’s greed like any business, there’s greed, perhaps a bit more of it than usual when you’re dealing with money on Wall Street, but certainly manageable. And that’s more the exception than the rule. At least that’s been my experience. What I also enjoy is money’s a topic that can lead to all kinds of discussions about who God is and whose money is it in the first place. So it’s been a fertile ground for learning and. If you will.

 

William [00:06:36] That’s great, Bob William here. I mean, I got a little off script here. I’m always fastenings hours and about the baggy prabhat. We must make rear end. A recently was talking to a younger person and they honestly felt like as a believer they couldn’t go into investment banking. There was just a broken industry that had no redemptive value. I obviously don’t believe that. And my question for you, as someone who’s been in this for 40 years, what is sort of your restorative redemptive view of the financial markets in your case? Probably the public markets. What does that mean, that holy ambition that drives you to continue to work here and try to make it some part of bringing God’s kingdom on Earth?

 

Bob [00:07:15] Yeah. So in money management or investment management more generally, a bit different from investment banking, of course, where it’s, you know, one deal after the other. And you’re not that investment management’s now, but investment bank can be intense and tense hours. I guess what I would say is comes at various levels.

 

[00:07:32] You know, as I went through my career and realized that the money is not named money. It’s not his money. It’s not her money. It’s all God’s money. All of a sudden, the stewardship challenge just rises to an unbelievably phenomenal occasion. You know, I say to people, if the money I have were really mine, who cares what I do with it? Maybe I do. Maybe my wife does. But it’s not mine. It’s God’s. And therefore, we have an unbelievably holy, if I can use that word, an awesome opportunity and responsibility to take good care of it. And as a money manager, I view it the same way if I’m managing somebodies money. Well, yeah, it’s Joe Smith’s money, but it’s really God’s money that Joe Smith happens to be a steward at that particular point in time. So whether it’s, you know, helping Joe give more money away, that’s that’s the most beautiful. But also for Joe to have a retirement, for Joe to pay for his kids or grandkids education. All this is very motivational and I think a very high calling a man.

 

William [00:08:39] And as a money manager, we really able to have you out to an event we had, which our listeners might hear as reference. We hope that more we have done more widespread events where we’re out in Salt Lake City with a couple hundred people and you challenged the table and kind of an exercise all the different tables to say, you know, what would it look like to create a fund that is faith driven? And of course, that elicits a lot of different responses from people. But maybe as you’ve had, you know, months removed from there. And also something I just know you been thinking about for probably decades. What does that mean to you? What does it come to mean you to have a a fund or a money management philosophy driven by your faith?

 

Bob [00:09:17] I first say that was an incredible event. In fact, I think I made the comment from the podium. Had you all tried to put something like that together 10, 15 years ago would’ve been a very small crowd. But the fact is, so many people are thinking and doing around these things, which is great. I think the interesting part to the specific exercise is everybody had a different answer. I don’t know. The people’s answers were contradictory to one another, but it just points out how faith driven investing is in the early days. We may never get to a standard, just like there’s no giving standard where it says that you and Henry and I all have to give our money to the same place or have the same criteria. But it’s the same principles, if you will. So when it comes to managing money, it’s, you know, both what we’re for and what we’re against and hopefully what we’re for and what we’re against is what God’s for and what God’s against. The against things that’s been going on for four years, if not decades. And, you know, abortion, pornography and then lots of other things get added. Depending on who you talk to, the more interesting and newer is, OK, what are we for yet? The flourishing of humanity, the flourishing of the business that you’re investing in, the flourishing of the employees. Of course, that means lots of different things as well. Education, alleviation of poverty. Is there good governance in this business? How do companies treat their employees? You know, there’s a whole long list of things one can think about. And of course, once you come up with a list to repeat, my list may be different from yours, but then it becomes an interesting exercise. Do you actually quantitatively score these things or is it a qualitative review? The same token, you’re not going to ignore kind of the principles that got you there. I’m not going to want to buy a company that has great governance, but the earnings are gone straight down the tubes. Sure. I do not want to go to buy one that treats their employees really well. If the stock is selling at ridiculous valuations. So it’s a combination. Can I save the sacred and secular things that we’ve all learned to appreciate?

 

Henry [00:11:27]  I also appreciate the plug for the event. Was awesome to have you there. Maybe close to 200 people showed up because you were a headliner.

 

Bob [00:11:34] That’s not. I don’t think so. I think it was your name, Henry that got them there.

 

Henry [00:11:38] But that’s not the case. But one of the things that I think really is a great thing to underscore, and that is in this larger movement of faith driven investing, there are gonna be lots of different answers for how people might feel that they’re hearing from God or learning from him in his word about how to deploy investment assets. And that’s one of the things I think that we did agree on, which is how important the heart posture is. And that as we get down on our knees with our spouses and ask guy that he might lead us in the direction that we might steward assets are, we’re going to come away from it. And we can have a different perspective than we had before that exercise about where we would invest. And yet some people might say, gosh, we really feel compelled to invest in solar farms in Nevada desert. And somebody else might say, I won’t invest in publicly traded companies. They’re run by crossfires. And someone else might say, I wanted your resident. Multi-family real estate was resident chaplains. And so there are no pat answers or a prescriptive way to go about asset classes. But it’s the heart posture. And I love what you just said there, which is what are the things that God is for and what are the things that he is against? Let that be our guide in because he doesn’t give you specificity. Then what that ends up meaning actually drives you. I think closer to him in trying to know him. Understand what does that mean or was that mean for you?

 

Bob [00:12:54] Totally agree. That’s a great way to put it. And again, as I said, many of us have been on that journey in terms of where we give our money. And it’s the same process. It’s just nowhere for most people as to where we’re going to invest our money. It’s the same sort of principles and characteristics. And God and his word are the guide for both avenues. And just the one is newer to most people than the other.

 

[00:13:21] And as you hinted, it’s not an event. You’ll get down on your knees and get up after you’ve prayed and have the answer. It’s a journey over time. As God matures us and puts us in directions and we interact with other people like we’re doing on this call that informs us and takes us in directions, that is very exciting.

 

William [00:13:43] So when you talk about the for and against and do things against is very easy for a lot of people. I think you’re right. There’s a lot of controversy for gets a little more tricky. I love the way you laid that out as we’re not all gonna be for the same things. God and his spirit manifest itself in different ways through each of us. And that’s what builds a beautiful world. One of things I would love and it can be a particular company. Obviously you can iwa competed as to. But I’d love for you to walk us through maybe your analysis on a company and kind of what in your opinion makes maybe you something that was a little bit in the gray area or something that’s a little hard to think through that you really took some time with and said, you know, at the end of the day this was complicated, but I do think it’s something God’s for. And here’s sort of the criteria I walked through to come to that conclusion.

 

Bob [00:14:30] So I start with kind of what got me here before I even debated these things with myself and with other people. That is, the company has to be a good company that makes money than I can see they’re going to continue to do that. They have some sort of growth rate and they’re selling at some reasonable valuation and all of that stuff. Believe it or not, is hinted at in God’s word. But the issues that God really cares about and we put it well, are the heart issues. So once we pass those I say secular tests, then it gets a whole lot more interesting. While I spent a lot of time on that’s controversial, is that the relationship between how the executives get paid and how the rank and file get paid and also the amounts. You know, I’m not crazy about a company where I’m going to exaggerate where the CEO makes one hundred thousand times what the average employee does. I’m not sure that that’s working in God’s principles of sharing, not the CEO can’t be or shouldn’t be one of the eyes, if not the highest paid employee. That’s absolutely fine. God doesn’t say everybody gets the same number of dollars per hour, as it were. But what should that relationship look like? And we’ve spent a lot of time deliberating about that. So I’m talking about both the quality and the quantity. And therein lies a lot of gray space. And I’ve had discussions with other, I think, well-meaning Christians that we come to different conclusions on that. And that’s the richness of the dialog that we’ve talked about here. And, you know, I want to have a dialog. I learned something and perhaps my views change over time. But that’s been an issue across a lot of companies that we’ve spent time on. That’s very difficult and a lot of gray.

 

Henry [00:16:17] Yeah. So I want to shift gears a little bit and go to some of the developments that we’ve seen in the public equity space, which is the space that you know, of course, best, although you, of course, are very fluent with other asset classes, too, like real estate. But on on the public equity side, there’s been some things that we’ve seen. They’ve been encouraging. And, of course. The event we had, Christine Ricoh, has also been on a podcast talking about the emergence of faith driven employee resource groups as some of the largest publicly traded companies and of course, we know about corporate chaplaincy ministries like corporate chaplains of American workplace chaplains. As you see, there’s shareholder conversations happen at the highest level where people are caring more and more about the environment and other stakeholders. You see that being more focused just on the environment or just on equal pay for women, which is awesome. To be clear, this isn’t coming about that. But you see a shift or an opportunity for publicly traded companies to offer a spiritual mentoring and counseling to their employees. Or is it just a fringe thing? Do you think it will work? Any comments you have at all about that? Knowing that somebody is large cap publicly traded companies that you invest in has so many different employees and faith is joining become more and more of a conversation in some of the technology companies out here in Silicon Valley where it Apple, Google, Facebook, they now have federal and play research groups. Is that just the next thing just in Silicon Valley technology or do you see an opportunity for that to be more pervasive through all of the large cap public stocks?

 

Bob [00:17:48] Thankfully, it is growing in lots of ways and lots of places. I’d set two sets of comments, one generally, as you point out, and you name some specific companies in Silicon Valley. There are a lot of companies that, you know, not too many years ago would have maybe tolerated your come together for a faith based discussion, a Bible study, wherever the issue is, as long as you do it kind of often the corner and way before most people show up for work or whatever, you’ve got to do it off premises. That line of thinking is changing. I think people are recognizing and perhaps through more and more companies having a corporate chaplain or something like that, they’re recognizing that those kinds of things increase the productivity, the positive view of the company, and they’re all self-reinforcing. So even from a secular standpoint, people are coming to the view that we’ve got to do more of this sort of thing. Isn’t that great? Because God smiles even when it’s a secular way of getting there. The more specific is because I’m more familiar with it. And the financial services industry, how so many of the financial service firms are recognizing that there is a strata of the public who are Christian and they want to understand what Christian investment principles might be. So could you give me a Christian financial adviser, please? And now these firms are having groups and trade associations from their own employees that fit this bill. Kingdom. Advisors, you both know that organization works in that venue and helps employees come together and approach their senior management to get some of these things done. So this is all going, in my opinion, and a good and accelerating direction. And this is good news.

 

Henry [00:19:44] It  is. A little further afield from what you may know best. But to the extent that you have any comments or thoughts on other asset classes or other things as crossfires look distorted, there are capital aside from what’s going on in public equities. Is there anything that compels you, anything in your travels that you’ve seen about ways that Christians are stewarding investment capital in a way that advances the kingdom?

 

Bob [00:20:10] Yeah, I think there are more and more organizations, more more investment vehicles that focus on their actions. Some of the good work that you guys are doing and your offerings, for example, there are more and more investments you can make, whereas there might be some financial reward, but also a reward that comes from the fact that somebody is going to flourish. It may reduce the return, but that’s stated right up front and some are putting it all together and say, no, we’ve got to move forward. I was just talking to a guy yesterday who’s in the process of making Christian films for young people and trying to get them on media that young people are watching. I mean, I’m talking about kids to compete with some of. Can I say garbage stuff that these kids might be watching? So there are lots of great things that are happening as more and more people are waking up to the fact it all starts with the faith and work movement that says, you know, our sun is not different from our Monday. It’s in an integrated place. And if we approach things that way, it’s going to be very natural we pursue these paths.

 

Henry [00:21:23] Yes. One other question related to that is do you see a time and I’m wrestling with this myself. But you see a time where there might be a. Product that might be created where an investor might choose to invest in a fund where there’s an open ended Feiner Unit Investment Trust or closed end fund that just invest in faith driven CEOs? Or is that potentially a problem and becomes a holy hurdle and kind of separates out the financial markets is a product that may be well conceived or the heart rate, but it just ends up it just doesn’t go over well. Any any thoughts on that?

 

Bob [00:22:02] Oh, yeah, I think. Let’s take the ETF world. I mean, there are a zillion ETF. They’re more E.T.s now than there are securities on the exchange. So it’s only a matter of time. Maybe one already exists and we just all know about it. That does just what you’re saying. Here’s an ETF you can buy and the holdings are just fill in the blank. CEOs, you know, a believer, the CEO is a public believer or whatever descriptive words. Oh, absolutely. I think we’ll get a lot of those sorts of things and it’ll be fun to get track records on these things to see where we get positive signals that make a difference.

 

Henry [00:22:38] So I think that that leads into another point, of course, which is a concept of excellence. And so what guidance would you give a listener to this who’s saying, okay, so I want to be more intentional about how I allocate my investment assets according to my faith? How do they look to do so with excellence?

 

Bob [00:22:54] So I don’t think you abandon. I called it a few minutes ago kind of a secular investment techniques that you would use, for example, in public equities. It’s what’s the company selling for, which is valuation and what’s its growth rate to keep things simple. I don’t think you say, oh, well, that’s not in the Psalms. Therefore, I’m not going to pay any attention that you still use the mind that God gave us on this planet to do those things. But then you layer on top of that who we’re doing good things. I’ll use the very broad phrase, human flourishing, what companies are doing that, you know, I think most of us over time are going to say, if I can make the most money by investing in a company where they, you know, they kill their worst 5 percent of their employees every year. You know, I’m not going to invest in that because it’s not gonna smile on me. And that’s not honoring who he is. So there will be tradeoffs to be made. And therein lies the excitement and I think the adventure that God’s putting this on.

 

Henry [00:23:56] Yeah. Know when you talk about track record, it makes me also think about how important it is that we endeavor to understand the backgrounds of our portfolio managers. All too often people think of Christian music has been not as good as the secular counterpart. I think our hope collectively of this movement is that the funds that are run, the exchange traded funds cetera will be run with excellence, with great auditing, with great reporting, with fund managers that have got great track records. And so as you speak to track records in Morningstar ratings. I think it’s really important that a Christ follower does their diligence last. Otherwise, this be a movement that’s characterized by mediocrity with just different products that are created, but they’re not done with excellence. And I think that that’s what you speak to. Also track records.

 

Bob [00:24:41] So agree. You said it better than I could. Henry, there’s just no way that this becomes second class. There’s no way that this becomes something often the corner that has a lower standard. The standards are high because you know what? We are made in the image of God. God is a worker. Last I checked, his work is a plus. Therefore, we as believers, whatever field we’re in, need to be a plus workers too. So we strive the best for his glory and for the clients and customers we’re gonna be serving.

 

William [00:25:12] Amen, amen, that’s a great place. Bob, as we moved the. We always like to bring our listeners in to where God has you in your story right now. And it’s always amazing to hear how that intersects with some of our listeners and our guests. And so specifically, when you think about God’s word in the scriptures, we’d love if you wouldn’t mind inviting us in. Where God maybe has you somebody you may be telling you in a new and a fresh way. It could be today could be the season that you’re in, maybe a passage you’ve been meditating on, or just something that’s always been a guiding principle for you.

 

Bob [00:25:43] So you prepared me for this. So I did give it some thought and it didn’t take much thought because it hit me across the head as what I’m about to tell you is hitting me across the head. I’ve known all along, God cares for the poor, but God really cares for the poor. And I think in my reading of the word in my prayer life, in people I’ve come in contact with in the last couple of months, God has since so president on that particular point, feeding the poor in spirit, feeding the poor materially. And as a result, among other things, my wife, Leslie and I, we are significantly increasing the percentage of our philanthropy that goes to the poor. We’ve always done it, but it’s not been, in my opinion, having been hit over the head a big enough percentage, given how much? Importance. God places on that we as many people do we on Thanksgiving, our family went to a center city mission in Philadelphia and serve the homeless, a Thanksgiving meal and yet one more time. They are God’s people who died for those very same people. And so I’m impressed with that part of who God is. We’ve got to care for the poor.

 

Henry [00:26:57] I love that illustration. But I’ve got to ask a phenomenal investor that really feels that God has a heart for the poor and wants us to care for the poor. Of course, as well. Whereas a really good investor invest in the poor. Is there a ministry or two that are particularly compelling to you by virtue of the excellence of the work they do and being able to serve and equip the poor that you have come behind that maybe some somewhere our listeners need to know about?

 

Bob [00:27:24] Yes, there are a lot of missions that do that and lots of different places. The Bowery in New York City is one of the biggest and one of the leading. The one we talked about for Thanksgiving Sunday Breakfast mission in Philadelphia. It’s the only mission in the country. I’m told it serves 365 days, three meals a day to the homeless. So kind of cool.

 

Henry [00:27:47] Very, very cool. Excellent. Bob, thank you very much for spending time with us. You’ve been a great encouragement to us at the event that we had in our calls and everything we’ve done all along the way consistently. Men in our sales and we thank you for your time. And I know that that’s a big deal for you. And thank you.

 

Bob [00:28:03] My privilege to serve with you guys.