John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman and today I am privileged to be joined by two men who are legends in the investing industry in their own right. So Britt and Matt, thanks so much for joining us today and welcome.

Matt Harris: That’s great to be here. Good to see you.

Speaker 3: We’re excited.

John Coleman: Well. We’re excited, too. And I’m looking. I know that Britt and Matt are big Texas A&M advocates, and Matt managed to wear his Texas A&M’s shirt. They both got their rings on. So I suspect we’ll have some advocacy for A&M today.

Speaker 3: But we’re going to want to talk about this year’s recruiting. But that’s probably after The Good Stuff.

John Coleman: Yeah, the recruiting class was pretty strong this year, I think, after you saw Florida State’s coach. So not bad.

Speaker 3: I think that was the that was free. He did that of his own volition.

John Coleman: Well, as we get started here, Britt and Matt, maybe Britt will start with you. Just give us a little bit of background in brief bio. You’ve been in the investing industry for many years now, Britt, and have had such an interesting journey through investing. Talk us through that a bit and let us know how you came to that and what your journey has been like.

Britt Harris: Well, you know, I was looking up what the S&P was the day I came out. Take a guess. What was the S&P in 1980?

John Coleman: Oh, gosh. 500. Am I going to sound ridiculous?

Britt Harris: 100.

John Coleman: Oh, my gosh.

Britt Harris: Yes, it was 100. You know, so at least for this cycle, you know, I’ve seen it all. But, you know, to help, I think everybody understands it really, for me to have understood my own journey. You know, I want to take you back for just a second. And I want to talk about two things that I learned growing up. One of them is it’s very important that you are 100% on God’s plan, not 90% on God’s plan, 100% on God’s plan. And that the second one is you have no idea what God can do with you. You know, you have no idea what God can do with you. None of the things that have happened to me, what I have ever imagined, you know, that’s not false humility. It is just the way it is. So on the first point, you know, my father was the youngest executive that mogul had ever had. This is the sixties we’re talking about. And at that time, Mobil Oil was in New York, and so we lived in Connecticut. And at the same time, you know, he was traveling all the time, but I don’t remember he’s absentee father at all. You know, he was a very involved father, a good dad. You know, he and my mom helped bring churches up and they brought missionaries into Ankara, Turkey where we lived for a while. And so he was an amazing man. But he’s out there at a Little League baseball game. I’m pitching, you know, nine. And so they don’t have an umpire. So you have to know my dad. So I’ll do the umpire. Okay, fine. No mask like dad. You put a guy like dad, put a mask on. No, don’t need a mask. That fastball hits him in the head, sent him in the hospital. In the hospital, he says to the doctor, You know what? There’s my back. You know while I’m here. Can you take a look at it? And two days later, my dad was in the terminal condition where he didn’t want to live for another. The doctor said, I don’t know if you can live for another five days. And I’m nine at this point. And as I learned his story, he had told his dad, my grandfather, when he was in 17 or 18, he felt like God was calling into the ministry. And, you know, his dad said something is very logical. It doesn’t make sense to me, like you’re loaded up with math skills and all these business skills. Now, what? Preacher needs to know how to do math, and it made sense as logical. And so dad went on and he got a degree in petroleum engineering and he got in the business and he was really good. I mean, he really did a lot. He and my mom did a lot of great things, but he was only 90% on God’s plan. So when he got this terminal diagnosis, you know, when the doctor left, he called up Southwestern Baptist Seminary and enrolled for the next semester. So all of a sudden, you know, I’m nine. You know, I left Fairfield, kind of Connecticut, a mansion, and went to Fort Worth, Texas, in a track house. And my dad went from being head of global sales to selling insurance door to door. My brother and I would actually go and tie the brochure on the door and he would come by the next day. And what that did is just I didn’t have to learn that money was not the most important thing. You know, I’m nine years old at that time. I was on a baseball team in Connecticut. I’m on a baseball team down here. I have my family there. I have my docs in here, you know, whatever it is. And so early on, I think God showed me that money is not something that should control your life and it’s not something you should obsess over. It’s better to have enough, but, you know, it’s a means to an end. It’s a resource that’s used. It’s not something that’s meant to control you.

John Coleman: And your dad ended up surviving that cancer.

Britt Harris: Yes, he did survive for another 20 years and ended up dying at 53, there was a miraculous recovery there, which is a whole another story. But so I have this background where I had a dad who was a preacher and a business guy and somebody say, I’m kind of half of both. And then so the stories I get out of them, this is very early. I mean, you guys cannot imagine how early this was and there wasn’t even a computer. I remember when they brought the first computer out and they showed us like, here’s a Suzy and here’s the numbers. That first cell, you put a one in there you could punch. And I was like, black magic. This wouldn’t go at 1985. And I was at Texas Utilities, which is not where you go. Normally, it’s become a you know what I’ve had a chance to become. But I did work with some great guys, and all of a sudden they decided to merge five subsidiaries into one. And each one of those little subsidiaries had a little pension fund. And all of a sudden I remember $330 million. And you got to understand, this is big enough that somebody needs to look at it, but not big enough. Is somebody important needs to look at. So I’m like 26 or 27. The boss says, you take a look at and people ask me like, How did you learn this? And the truth is, I learned it on the bus. Everybody who’s in any business, you know, it’s kind of like how much you learn in a day. So all of a sudden, I don’t know anything about venture capital, but I have a venture capital guy. Come in and talk to me. I ride the bus and I’m studying venture. Oh, that’s what venture capital is. He tells me how it works. You know, you’re faking till you make it right. And then I review it all the way home for three years, and I walk into the office one day. And. friend says congratulations. Britt. And I said, thank you very much. I have no idea what we’re talking about. And I have been given the award, being on the top 25 investors in America, and I was only 28. Wow. Yes. It’s a wow until you realize there’s absolutely no competition. I only 29, you know, involved. You know, you get something like that on your resume. Well, actually, what the company did was they said, no, this is out of control. You know, we want you to be executive in this company, not an investor. I went to a service centers. The first person that they ever going to use in that kind of is senior management track. And I got seven offers, which I didn’t surprise me and I didn’t have this and this I was in with meter readers telephone. I didn’t have any typewriter. I didn’t have any. So how do I respond to these letters? I had a pencil and a piece of paper. I wrote out my resume and pencil.

John Coleman: So that’s not great advice for students entering the field today. I would imagine.

Britt Harris: It was unique, I guess using that at.

Matt Harris: Least.

Britt Harris: You know, and that was, you know, you can’t lose bank because you got to race things, you know, and the next thing I know, Jerry and I are up in Connecticut Mass one and then I just ran the gantlet up there where first comes chemical combustion engineering and I got there and combustion engine was gone bankrupt. I looked into. A little more. They got acquired by coming out of stay around Bloomberg and I started first of all I was getting I had I think six different plans overseas. And they were very purchased combustion engineering, and they only kept two people. They kept me and they kept the head of HR. And there was a day that time when I was going to a party for all the people who were going to be let go because the company hadn’t been running well enough to keep it going. And as I was walking out the office, they said, just before you go sign a check, and I signed a very big check for the CEO of the company who had not managed the company well enough to keep it out of this position as I was going to have a party for the people. And so along the way and there’s other stories I learned that management is a sacred relationship with the people that you’re overseeing. It’s a sacred relationship for the people you’re overseeing. It’s about them. It’s not about you. Then a guy named John Carroll came. He was one of the really programs of this business. And at that time, they were the most respected pension fund in America. And he was asking me to come and run their equity division. And we had lunch and Rob Nice and he said, sent me your resume. And I just took it as perfunctory. I thought he had no idea how young I am and I didn’t send it to him did not because I didn’t want to. Just didn’t take it seriously. Third time around, you know, I sent it to him and ended up offered me the job and I called three people who knew him and knew me. And I said, John Carroll just offered me this position as the head of equity for DG, which is now for everybody split but Verizon and should I take it? And they said, no, wait a minute, guys, this is a rhetorical question. This is a big one and why not? And I said, because we know John and we know you, and he’s a bull and verbal and you can’t have the proverbial two bulls in the same place. And oh, by the way, you’ll be the little bull. And so I went back to John. I said, John, it’s a great offer, but our mutual friends have told me that we’re just going to make each other miserable. So I don’t think I should take it. And he said, Look, everything says correct. And when he didn’t say, Is my dad, I’m 61, he was 56, that I am ready to stop running the company. So you can’t you run a company and I run the board, step out on faith. And the minute I have the elevator. I ran that company and John ran the board. So I’m in my early thirties, so I got to watch a master at board level and I ran the company. So I was able also to bar his credibility for some crazy ideas I had. I once had the CFO of our company take my proposal, stand up and throw it in the trash. In the trash. And I don’t know how I did it, but I got up and I got out the trash and I took it back and I said, Mr. Tristano, this is what we need to do, sir. And he looked over John Jack, it knows what he’s done and wow. So that’s credibility. And then John retired and I became the number one guy that was right in right into the heart of the tech and telecom crisis. And I was there. And then all of a sudden General Motors was asking me to come and run their fund and this was their public. And I was using Bridgewater as my reference. And Bob Prince and Ray Dalio are really good friends. But the Princess and the Harrises vacationed together.

John Coleman: For reference for listeners who might not know, Bridgewater is now the largest hedge fund in the world, I believe still and has been successful for many years now.

Britt Harris: It’s the most successful private investment public investment operation. I mean, central banks rely on Bridgewater. And so I get this phone call. I’m in California, said they need to talk to you urgently. I call them. And I thought, oh, my gosh, what has gone wrong? Said, if you’re going to actually go now we want you to come and be our CEO. So I did that and it was fantastic. I was literally on top of the world as far as the industry goes. And then I was struck with depression just out of the blue, on top of everything. And when it first happened, you look at what in the world happened here and you just just start going down and writing about who loved me and I love them. Don’t quit. Don’t we know you’re. And that was loving advice, that terrible. So I did. And I went into a year of recovery. And I’ll tell you.

John Coleman: What’s this new for you? Or had you ever had a bout with depression before? They had a brand new.

Britt Harris: Brand new. And I found out later that my father had had a change, that maybe it’s earlier, but I’ll tell you that when I came out of it, I was more spiritually aware. Than I have ever been in my life. I mean, just. Everything was just alive. You actually knew? Kind of broke both sides. And that loss really a deeper faith. And there are certain things, you know, everything that God does or everything happens to you. God is going to use it to make you the person He wants you to be. And I don’t think there’s ways that I could have gone from who I was to who I became without that suffering. You know, towards the end of it, I walk on the balcony. We’re baseball guys. And we knew that we would lose in the Little League world and a little process the third week of July, we always get knocked out. So we had a vacation the final week long, the whole this year we don’t get knocked out. So all the family know leaves and Brother Will and I stay 6:00 in the morning. I want everybody to listen to this. 6:00 in the morning. I had been able to read the Bible, hadn’t been able to pray. Really was kind of hard to focus on anything. And I’m there in Connecticut and my wife my wife has every translation of the Bible it’s ever been created in her kitchen. What is it? And so I just grabbed one and I went out on the balcony by myself. Remember, this is Ridgefield, Connecticut. I’m looking over this beautiful forest early in the morning. And I just opened the Bible. And, you know, God does just amazing things at the end of Matthew Chapter nine. And help everybody understand what that was. That’s the one that ends with the fields are waiting to harvest but the workers are few. Pray for the workers to come to the harvest. But right above that, it says Jesus saw all the people and he has compassion on them, for they were helpless and harassed like sheep without a shepherd. You saw all the people. You had compassion on them because they were helpless and harassed, like sheep without a shepherd. And look, I can honestly say it’s ridiculous. Like, I had never thought that I myself needed compassion. I thought, maybe I’ll give you compassion. It’s 50/50. But now I’ve been through this situation. I can’t deny I’m desperate, need compassion. And it says all everybody is. And because we’re all helpless and harassed and the only difference in people’s whether they have a shepherd or don’t have a shepherd. And so that lost a whole new spiritual wave in my life and I’ll just finished quickly. So I left Bridgewater. I came out. If there’s a concept called suggested significance, we should mind that layer. But I was able to come to Texas teachers where I could serve 1.4 million teachers. And then I had a group with me and they got mature. And now I’ve moved over to Tameka, which manages my four University of Texas, Texas A&M and then V.A. Hospital, which is the second largest university in the country, the sixth largest university in the country, and the top cancer research facility in the world. And this is all happened over four years. We’ll get to the markets in a little while because they’re very different. And along the way, everybody’s listening. Thank you know, I’m a nobody. Well, yes, that’s correct. Does it matter? Does it matter? God’s going to do what he what he wants to do. So I’m from Arlington, Texas, 25,000. You know, we sell citrus. My job in high school was to sweep up the cotton grain. Jen, how in the world does that guy become one of the top 25 investors in America? Become an adviser to the president himself. Become an adviser to the New York Stock Exchange. Adviser to the New York Federal Reserve and the Dallas Fed. And have been named one of the top five people in my field. It just doesn’t make sense. It does not make sense to me. But you know what? That first lesson. I want to be exactly in God’s plan. I do not want to be 90% off. God has used that, and I’ve been places that nobody ever gets to go and God puts his men and women where he is.

John Coleman: Well, one of the things you see consistently in the Bible and even in the modern world is that people do have to go through periods of experiencing failure in humility, often before God will put them in positions of authority so that they do know they need compassion. I was talking with a friend the other day about one of the things that’s lost when you’re extraordinarily young often, and it’s the almost the temperance that comes with age, the understanding that you yourself are fallible, that you do need compassion, and the understanding that everyone else does too, that everyone you might have sat in judgment over is trying and sometimes failing, just like you have. And there’s a real transition of wisdom there that has to happen, I think, before you’re equipped to take real positions of responsibility and before often you can be trusted with those. Right. And I think that’s partially what you’re describing.

Britt Harris: It is. And what happens when you realize that you need compassion and so does everybody else. Fear goes away.

John Coleman: That’s right.

Britt Harris: Fear goes away. No, there’s a United States. Oh, my gosh. The guy needs compassion. You know, there’s the schoolteacher. Oh, my goodness. She needs compassion just like me. And you give up the pretense that you don’t, which takes a huge, you know, everything about developing a competitive advantage to align yourself with what’s true and not being adverse. It kind of ran counter to what’s true. And so for me to sit there and say, well, you know, I’ve got this, I got that, I don’t need compassion, which is a false narrative. And to give that up in the language truth, you know, freed me up to be a better decision maker.

John Coleman: That’s fantastic. Matt, I want to spend a little bit of time with you, if you don’t mind. So you moved to Connecticut, 21 years old, and obviously you’re growing up around this. Your dad’s making a lot of interesting transitions. Tell me a little bit about your childhood, and particularly when it clicked for you that investment might be in your future.

Matt Harris: Yeah, I mean, I had a great childhood, really couldn’t have been better. And I honestly think that’s what made investing interesting to me. Right. Like I was fortunate to get to grow up with a lot of really successful people in the industry because we lived in Connecticut for I think when I was three months old, actually know 30 something. And then they surprised me and moved to Texas after I went to college in Texas, which is a different.

Britt Harris: House of rent still.

Matt Harris: I love Connecticut and Texas. I honestly was I was thinking about it like what really drove me in this direction. And it was really that childhood experience with those people, you know, just getting to be around people like the princes and like a son of Beschloss, as is were very close and several others. Flip flip is not in the investment business, but it just these people that I never would have had a chance to know that I got to be really close with because of who my dad was. And you get close to them and they’re just fantastic, hardworking, honest people. So it’s really my experience with the people growing up that maybe they’d be like, Yeah, I want what they have.

John Coleman: You know, in all of this. When did you actually start investing? Like, one of the things we think about with our kids, for example, is when to kind of expose them to the concepts of investing, even just in their personal life. Do you recall kind of when you actually got into it and did you ever consider seriously another career or was this very clear from the outset?

Matt Harris: I mean, I think just to riff off the story my dad just told in terms of like when I started investing and caring about it, like all this stuff was rising up really fast and being CEO of Bridgewater and all this stuff, like we had no idea that any of this was happening. Right? Like, I think my little brother story about the ice cream truck really drives that home. And so, like, I remember he tried to take me out to dinner one time in high school, explained markets to me, and I just was not interested at all.

Britt Harris: Really?

Matt Harris: Yeah. And so this stuff wasn’t on my radar at all until really like second half of college when you start getting a job. And even then for me it was at that time it was more just about the people that I knew I would be exposed to. And, and, you know, so like 12 years in in the industry, it’s been totally true.

John Coleman: Well, one of the things I’ve noted over the course of my life is that beside maybe every successful man is also a successful woman in relationships like this. Matt and I were texting earlier and he mentioned just how influential his mom had been. And so, you know, we’re talking about father son. But maybe I mean, Matt if you don’t mind telling me just a bit about your mom and the influence that she had and then Britt, perhaps your wife and the influence that she’s had on you.

Matt Harris: I mean, I think a lot of things come to mind. You know, I think growing up, my dad was very strict and we did. And we still fight pretty much all the time. I mean, it doesn’t really affect our relationship very much because we’re both fine with conflict. But he was the strict one. He was the one grounding me, you know, all that stuff and being more the disciplinarian. And then my mom was kind of the softer side, and so they were a very good team in that sense.

Britt Harris: So when you look at couples, there’s power couples and balance couples. And my gifts are administration teaching, giving. I’m very extroverted. You know, my other ones are compassion, you know, service, all that kind of stuff. And I married almost the exact opposite of me. So you can come to the Harrises for whatever you need and you’re going to get help. But it’s one of us is going to help you, not both of us, but we also merged into when you marry, you create a third thing. It’s, you know, each person is individual person that you create a third thing, you know, what is your couple gift? And our couple gift happens to be giving because it’s her third and my third. And so it rises to be our first together. So I think Matt got to see a lot of hospitality. But, you know, Jerry was the person making everything happened in the back and I was the person making everything happen in the front.

Matt Harris: And I think my mom, I think she saw early on that my dad had surprisingly developed this amazing platform to help a lot of people. And so she made, you know, and still makes the decision every day to have her life be about that.

Britt Harris: And so let’s just talk about ladies for a second. Joy, it was called to stay at home. In fact, we never made a decision. She just she worked up to the day she had our first son and she just stayed home. Other women are called to go back to work. And so what I think is important is that the woman has the choice to do it. And so what I mean by that is you have your financial house in order because. Most people are not going to know what they really want to do until that child’s their. And some are called a stay home and some are called to go back to work. But do not put your wife in a situation where she doesn’t have a choice because you’ve set up your financial circumstances where if she doesn’t go back to work, you have to sell your house or, you know, two cars and something like that. Give her the financial freedom to make that decision so she can make the money that God’s dying her to. I’ve got lots of amazing ladies up here, and I’m so thankful that they’re called to work. But in this case, she was calling home. Where is your cockles? Is that question.

John Coleman: One that will pivot in a moment, if you guys don’t mind, to the markets. But I will say there are about three things that make me choke up in life. And one would be talking about my mom. One is probably my kids and one might be a really good steak. So I guess you are in good stead. I want to circle back to some of these deeper kind of theological topics related to investing a bit later in part two of the podcast. Before we do that, though, you two are incredible craftspeople in the investing industry. You know a lot about what you do. Matt Your expertize these days is in venture, although I know you have deep expertize part from that. And Britt, you have more of a macro perspective on the industry. We’re obviously living through a very unique period of time right now on the economy and in markets, and I was hoping we could spend just a few minutes with you all commenting on what you’re seeing and particularly where do you think we are right now in markets and help us place this particular period of volatility in historical context?

Britt Harris: I think the first thing that people need to understand is that there are these short term business cycles, you know, and then there’s a very long, long term cycle. And so we have just finished 40 years of the same cycle actually, I think was last week or earlier this week. Right around now, you know, we’re getting to the 40 year mark. Remember, the S&P was 100, now is at 4200. You know, I hope when we actually play this is the same level in interest rates. When I came into the market discount rate was at 20% know went down to zero. The inflation rate was 13%. You know, it got under one, you know, Treasury bonds were 14%, you know, got under one. What had happened was the prior era, you know, ended in the latter part of the 1970s as inflation started to stoke and stoke and stoke. And I want you to just imagine a train this climb up a mountain and all of a sudden people act. We can’t stop this thing and people start to jump off the train. And that’s when you see gold start to outperform commodities, just by the way, because people are getting out of the system, that this is going over the top, this is the end of the world. And then Paul Volcker came in and all of a sudden stop the train. I think it was the ski slope. We were at a 14,000 foot high ski slope. The multiple in the market was like eight times. We’re talking about the treasury markets are 14%. Just think about how much as interest rates go down, how much discount rate factor you’re going to get from a 14% reduction. And so in 1980, also, we were talking about energy finally enough. And our big problem then was we are not energy independent. We have got to get ourselves and we’re dependent on foreigners for our energy source, which means they can cut us off at any time. And our debt to GDP was 30% of GDP. And so here comes the interest rate down. Inflation is going down. You know, the bonds are going down. By the way, bonds are playing a really terrific part in diversification because, yeah, if you have a longer term bond, your stock market goes down in 2020, 36%. You’re bottom up 21. Yeah, it’s great diversification and this is a 40 year period. So in the ski slope analogy, we skate around, we’re now at the bottom of the ski slope and so we’re going to have to go sideways for a while or this is a better outcome. We’re going to have to replace multiple expansion for everybody who’s out there. You know, the price of the stock going up relative to its earnings because the interest rates changing, we’ve got to replace that with actual earnings, not just our interest rates. I think we can do that. But so people are very confused right now because a 40 year period in the past is overlapping with the four year period going forward. And so we’re getting statistics every day. They’re baffling people. Yes, my father followed 12 economists religiously and these guys are pretty good. Every one of these guys in the first quarter and the second quarter, not just got the degree wrong, they got the direction wrong. People criticize the Federal Reserve. The Federal Reserve has been given some very bad numbers and they’ve acted on those numbers. And you know, so and then on top of it, of course, we have the Russian situation comes out of the blue. We have China who has moved into their third phase, first phase with industrialization. Second phase is becoming an industrial country. The third phase is taking over the world. And so now we have this monstrous competitor over there, and that’s a completely new factor. We’ve got this whole climate change, which I know you want to talk about. And so if this overlapping, you know, these these circumstances, we just can’t get the day right now and everybody thought the market was don’t go down right now. It’s gone up. Our models just say, you know, we have a very slow trigger for a bear market and our models did not signal a bear market. And when it pierced the bear market, that, oh, no, you know, our models are wrong. Well, that lasts about five days and came right back down again. So, you know, we can play anything else that you want. But the main thing is, you know, we have two years overlapping plus these extraneous factors of the war, plus these long term factors are going to be for a while with the energy transition and so on.

John Coleman: Yeah, I think that’s one of the most confounding things. I was speaking with our team just yesterday and it’s so difficult to predict what the next 6 to 12 months will look like, right? You’ve got incredibly tight labor markets. There’s a question about whether the economy is in recession or will go in recession, although that has seemed less likely recently, financial markets took a steep dove over the last 8 to 12 months before kind of recovering, at least in public markets. And there are just all these conflicting variables. And you mentioned some of them supply chain tightness, military activity overseas that make it quite challenging, I think, to really predict with any certainty what the next six or 12 months will look like and are proving to be quite different than the late 1970s, which I think was an analogy that some folks were turning to for the period that we’re in now.

Britt Harris: Yeah. So what we do is we have a series of pre described economic regimes. And we know exactly how many times we’ve been in that regime over 50 years. We know what happens in that regime. We know where it’s historically gone when it changes regimes. None of this. There’s no physics in here. There’s no sanctions of gravity. Like the apple must fall from the tree so that we can go up and go sideways. But at least we know what’s happened in the past. And so we’ve had this model for 15 years, and it’s never once pierced into the inflation region, never once over 15 years. And last, I think it was October or November. All of a sudden it pierced into the inflation area, but it was high inflation and high growth. So inflation doesn’t have a huge effect if you have enough growth to offset the higher inflation. It does lower your real return, but it’s not a big hit to your pocketbook. And we stayed in there and then we flipped over to high inflation but low growth. And in that scenario, just to your point, we bump back like when did this happen before? Was 1975. 1979 and 1981. Now just the exact same times we’re having a problem with oil. And of course, 1991 was the Gulf War. So I was actually pretty comforted by the fact that the markets are operating normally. This is the same scenario we had then. The markets are doing the same thing. What we have to have is we’ve got to get inflation lowered and have a super low, just got to be lower and we got to have enough growth. If we get into this period where there’s relatively high inflation and not enough growth and the Fed felt focus on stopping inflation instead of stimulating the growth, then, you know, we can have problem for a while. I mean, these are all things are all for a period of time.

John Coleman: Matt, let’s let’s turn to you for sure, because probably the area that’s been hit the hardest is growth equity in public markets. Growth oriented securities. And then late stage venture growth. Equity on the private side, I think was the earliest area to get hit and one of the hardest hit. You’re spending every day in venture markets. What are you seeing right now and how are you thinking about the next six or 12 months in venture?

Matt Harris: Yeah, it’s been interesting. One of the interesting things is because I spent the first ten years of my career in oil and gas between 2010 and 2020. I’ve actually been through several of these cycles and I would say so far this doesn’t even count as one, to be honest. Like it’s not even close. I think my, my, my experience in those ten years is that these things get way worse than you could ever imagine. And we’re not even close to that. It’s a good time to ask the question, because normally my role on the team is sourcing and doing diligence in negotiating the investments that are making. And I don’t necessarily zoom out every day, but I do write our quarterly letter to our investors, which I actually just finished this morning, which has a market update. And it is really interesting. You know, on the one hand, as of a week and a half ago, when I when I wrote this part of the letter, the Nasdaq was down, I think was the mid-twenties. And we looked at the Goldman Sachs non-profitable technology index also as a proxy in that that had gone peak to trough 54% down, and it was 40% at the time. And so that was a little bit of the dissonance that makes for some, you know, you wouldn’t expect early stage entrepreneurs to be dialed into the markets, but like they were looking at, you know, S&P and the Dow Jones and just living their life and thinking like things don’t seem like they’ve changed very much. But when you look at specifically at the companies that you mentioned, you know, the small high growth public technology companies, they just gotten destroyed. So that’s like one part of the equation. But then, you know, in Ventures, our firm is Pre-Seed Seed and Series A, so we’re pretty much as early as you go for an institution. And so far the data mostly from Pitchbook shows no change. I mean, the trend is down off of 2021, but 2021 was kind of a wild year. And so I don’t think people count that as a trend yet because it’s still way, way higher than historically. But in terms of, you know, funds raised and the number of deals done and valuation, you know, at everything except the very latest stages of venture, you basically haven’t seen a change. So there’s this weird tension between I think we’re on track to do like 15% of the IPOs we had and 2021, which you would think at some point that’s going to feed back into the system and slow everything down. But also we have three years of dry powder. It’s done the last 12 months investment pace. And so it is a really interesting time. I mean, from like a blocking and tackling perspective, you know, what am I seeing in the market? Like, things have definitely cooled off a lot. Like I’ve had two companies call me in the last week. We make a lot of investments in our funds doing really well. But I’ve had two companies call me in the last couple of weeks saying, you know, we can’t raise money and we’re out, and so we’re going to try to sell it and salvage what we can. That was not happening six months ago. And you’re starting to see just a lot of stuff like that happen, a lot more investor friendly environment for the moment. But then at the same time, you’ve got I we were just talking on the way here. The main indices like the Dow and S&P are down like 8% now, peak to trough, which is like a bad day. And so it’s a really interesting time and absorption to see how it plays out in the next the back half of the year.

John Coleman: Go ahead. I was just going to say, my colleagues and I, you know, we think a lot about early stage venture as well, Matt there is this tension where you would think the challenges that have taken place in public markets, particularly the lack of an IPO market, would begin to filter down. But there’s been so much capital raised by these mega funds that deal in late stage venture. There’s a real question about whether early stage venture companies won’t find a source of capital because of all that dry powder. And I think that’s one of the things that’s more opaque about the industry. It’s harder to see then public markets that might support earlier stage ventures. You’re describing where that money has to be put to work somewhere, and an early stage venture doesn’t seem to have taken quite the hit that later stage venture growth equity has taken.

Britt Harris: So our portfolio, I think we’re the fifth largest venture capital portfolio in America. So in 2021, we and everybody who had a really good venture capital strategy that we’re all up 100%, and that just in that one year now, you know, venture capital kind of laid fallow for quite a while. But venture capital has changed because at this point, companies are staying private longer. You know, companies that would have gone IPO maybe two or three years earlier staying private. Longer for a whole bunch of reasons. And so there are more mature companies. You know, when they actually do come out for an IPO, I’ll just give you kind of a fun and terrible story. Now, we had bought Coinbase and we had $1.9 million in Coinbase. Which we sold for 740 million. Yes, but one other thing is changes. You don’t really get your stock distributed. You know, it’s just terrible because these leaks out forever. Coinbase attributed all their shares before they took it public. And so we had the opportunity to sell everything, which you did on the first day, which a lot of people do when they’re you know, we’ve been here for 12 years to get to this point. And so we you know, our guys sold it things like 374 or something like that. And, you know, the stock today is what.

Matt Harris: Is it, 90 now. It came back after the blackout.

Britt Harris: Got down to below 50. But this industry which I’m at, this is a digitization of America. It’s also a, you know, an alternative form of doing business. You know, it’s not going to go away. And I guess the last thing is it’s interesting, small cap stocks in the public market. I struggle in part on what people are using as an explanation has these seed companies. Now you get public is not all right. My main product is already obsolete because there’s a seed company out here chasing my market and so they go public and kind of, I don’t care about you anymore. I’m going back down to the guy who’s got the next new thing. Is innovation getting faster and faster for listeners?

John Coleman: I didn’t do the math here formally, but I think a 30,000% return on investment is pretty solid for a venture investment Matt could check my understanding, get the industry.

Britt Harris: Okay, it’s okay.

John Coleman: It’s not bad. Yeah, just fascinating, guys. But I do want to check in on one other topic that I know our listeners are quite interested in, which is ESG and values investing. You know, one of the things that we focus on a lot is faith driven investing, obviously, like the name of the podcast. And Christian’s thinking about whether and how they should try and express their values through their investment portfolios, something obviously the mainstream world has been very aggressive about over the last 30 years with the development of ESG in various types of impact investing. Just a brief question for you all is how do you think about ESG and values investing broadly right now and how do you think Christians should be thinking about it?

Matt Harris: Oh, I’m going first on this one. Okay. I mean, I guess I’ll just say, like the obvious thing that I’m not the right person to go first on this one. But I think what I found is where I work at Draper Associates, I found really strong alignment with faith and with ESG. And what I mean by that is I think the venture model creates the best alignment with customers. I’m only going to do really, really well if our customers do really, really well. There’s not sort of the really big base, really big bonus every year structure. It’s all in the area. But I think that creates really good alignment and really good opportunity to just serve customers as well as you can. You know, our organization in particular is is actually very mission focused alongside generating those returns for our customers, that mission being proliferating freedom all over the world. You know, I think our view and what my boss, Tim Draper, has been big on his whole career is that, you know, entrepreneurship is the engine for protecting and promoting freedom all over the world. And I find great alignment with that in my faith just because I think it says right out of the gate, you know, we’re meant to be free, we’re meant to have a choice. But there are consequences to the choice that we make both on Earth and eternally. So I think those two things, you know, the the freedom orientation is very aligned with faith and the compensation structure. I found it to be really good for things like social and governance, right? Like if I see color in my job, I’m not going to make money because I’m very incentivized just to pick the best entrepreneurs, regardless of who they are or what they are, where they are. And to do otherwise would be to work against myself because of the way the compensation structure is set up in early stage venture where the funds are smaller. I mean, on the energy stuff, I personally think that any conversation on energy first needs to start with the thank you to the hydrocarbon industry. You know, the population of the world has grown, I think, between three and four times since I think 1960. You know, the poverty has gone way down and wealth has gone way up. And it’s I would say that’s because of democracy and capitalism and hydrocarbons. And I don’t know how you could argue otherwise. And so before we get into like where the industry is going, we should thank these brilliant engineers for what they’ve done. And, you know, I’m excited about being a millennial. I’m excited about how we’re going to be the generation to make this sustainable and make this into something that can last forever and not force us to have to move to Mars or whatever it might be. And I work on quite often in my job, actually, but I think it’s, you know, it’s important to be realistic, right? Like I forget the number, but it’s something like I worked in energy for ten years and I’m still being educated on all this stuff. It’s very difficult to be fully educated on energy. But for example, you know, I think something like 80 to 90% of primary energy demand is still from hydrocarbons and there’s really no replacing 80%. Yeah, there’s really no replacement for it in things like ammonia, which is like basically the reason that we’ve been able to feed this population growth from the fertilizer, you know, plastics, cement and steel. There’s really not a replacement for hydrocarbons in these things. And so I think it’s important to be realistic about what we can do with energy. I’m all for making it sustainable. I do think we have a problem, but we need to go about it in a way that makes sense. And I think there’s an education side, like some basic stuff to overlay. It seems like the general public may not be aware of is that, you know, oil and gas wells, the climate, right? Then I’ll just come online and stay at the same production rate for the rest of their life, especially in the U.S., where it’s mostly shale wells. Like these wells are coming off 50 to 80% of their first year in the US. I don’t know the latest numbers, but, you know, 10% of global production. And so if we shut off oil and gas production from the US, then this is a very inelastic market and you’re seeing that now out in the real world. And so anyway, that’s a lot like I’m excited to be part of the generation that’s going to make this work and make it be sustainable. But I think we need to be a little more thoughtful about it and I think. Most people would agree now that we’re seeing it come through at the pump, basically.

Britt Harris: That’s good. So now from the other generation, first of all, you talked about this values on investing. It is true that, you know, millennials, you know, they want their money to do more than just make money. Now, they’re not willing and they shouldn’t be willing to make less money, you know, to express their values. Now, that’s not something, unfortunately, the human condition is ever going to support in general. So initially, a lot of them said, you know, we can make more money, you know, with the same risk. And there’s really not any real evidence for that. But what they found out is like we can make the same money and take out the oil or take out the whatever cigarets or no kind of whatever’s that you want. This idea is new and it started in Europe. About 70% of the funding of all the climate change money is coming from out of Europe. The annual flows. Europe is, number one believing that China is number two. We’re number three. But with even with that said, one third of all capital flows for the last three or four or five years have gone into some kind of renewable structure. And people are on the one hand, millennials want to express their values. On the other hand, this is becoming law all over the world. You know, it’s not like just suggesting that you lower hydrocarbons is now a law and it’s kind of out of the gate. And the UN plan, I mean, they’re doing the best they can, but they haven’t. Unsolvable problem. How would you like to negotiate with 178 countries all at the same time and it’s just impossible problem. But if you sort of boil it down, the U.N. plan is marketed by politicians, you know, supported by European scientists and created by activists. And so what that comes down to is the plan is a utopian plan. It’s not a plan you can actually implement. You know, not people have ever had to create energy in any way. For the most part. They said, well, we can just do this. And it’s a utopian plan. And what’s happened is even for them, you know, the Russia situation, California, Germany, the U.K., they were so far over their skis because they were trying to lead this too fast into the future and they’re all using coal. Yeah. So the second thing is. The word existential risks. I want everybody to hear what the reports actually say. And you know, when you do a report, you know, it’s a scientist or a researcher and they’re trying to decide something and they come up with a best case scenario, a worse than base case, a better than base case. Or they come up with this distribution, you know, 1 to 100, the population can happen. So when people say scientists say it’s actually centuries, that is actually true. But what it implies is, is the base case and it’s not the base case. If we have a worst case scenario, it could be existential risk in some places. So there’s this kind of deception that’s going on because I’m going to get the money. How much do you think McKinsey has said this energy transition is going to cost the world having any idea?

John Coleman: It’s tens of trillions. I know, but I don’t know exactly how many.

Britt Harris: 275 three.

John Coleman: 275 trillion. Holy smokes.

Britt Harris: Yeah. The Earth’s entire economic value today is about 100 trillion. We’re almost three times the value of the earth that’s going to be going to this situation. And so it’s going to be about $10 trillion a year. And people are trying to make it sound like a small number. So it’s only three victory knowledge incremental where, you know, what, three or $4 trillion is to create a new Japan or Germany every year, every year for 30 years, you create a new Japan or new Germany. You know, it’s just it’s so big that people have no idea how difficult this is. Now, what San Jacinto is going to talk about is, you know, we don’t need a utopian plan. We need a practical plan that we can actually implement and be successful in that plan rather than starting out with the rich people. Now, you start with the poor people. You know, when they’re talking about doing something immediately, you know, if they don’t get a huge carbon tax, then anyone who’s poor or living anywhere near the poverty line, 70% of the world is is going to be sunk. And so we think we should start with compassion and we should say no. What can we do to make sure that these folks who there’s a billion people in the world who have no energy access whatsoever. It’s things we can’t even conceive.

John Coleman: Yep.

Britt Harris: And so we want to start with compassion. We want to be pragmatic, and we want to be affordable. And here’s the other thing. This is super important. Everybody, when you’re talking about the planet we’re on right now, there’s nothing about human flourishing in that plan. Absolutely nothing about human flourishing. And the match point, if you look at your history, how long you think the world’s been? Around 5 minutes or 50 billion years. Whatever time you think it was around, there was absolutely no growth. Absolutely no growth for all that time. The way you grew is you captured something, read the castle and took their castle. There was no growth when hydrocarbons was discovered. You know, of course, they just thought it was going to be a lamp. But hydrocarbons are critical to our food supply. They’re critical to our medical industry. They’re critical to our ability to transact business. They’re just critical to the whole operation. Now, one down here. So there is a limit. You know, a good thing can come a bad thing, you know? So there’s a limit to how many hydrocarbons we can get in our atmosphere without having some effects. And so, you know, when you’re talking about 1900, we’re so far from the limit. But you know, what happens is Europe goes out first. Europe’s emissions have been going down since 1985. U.S. goes out. Second, U.S. two nations have been going down since 1995. Hmm. Down now. They’re still too high. They need to go down more. But they’ve been going down. If you ask a typical person on a street what direction our nations are going. They think you’re all going out. They’re not even going to do that. Now, that’s why you listen to this podcast. And, you know, this is a global thing, like this has to work. Everybody has to be in here, because if any major country doesn’t do it, it undermines everything else everybody else did.

John Coleman: So Britt and Matt, I now want to talk a little bit more about some theological topics or some integration of faith and work topics. The first I know that you both have is this idea of work as worship, and that work itself can be a mode of worship. Would you talk to us about what you mean by that and what work is worship looks like in the investment industry?

Matt Harris: For me, I think it means I think everyone on Earth is not only made in the image of God, but also has any gifts and talents. I think one of our key sort of tasks is to figure out what those are and then put them to at least one of the best use cases that’s out there. And so for me, I mean, I think there’s a couple of places in scripture where it talks about, you know, spiritual gifts and giftedness and it gives you a good list. So going off that, I mean, I think my gifts are business administration, which is fairly common in our industry. Maybe the less common one for me is a gift of encouragement. What I like doing it. I’ve always been that kind of person. And I think venture capital is a great place to encourage people when you consider, you know, what these businesses end up being and how hard it is and how many kind of lows there are for these entrepreneurs. And so for me, you know, other than kind of stuff I talked about earlier where I was, you know, being aligned with our customer, but it’s also, you know, figure out what your [….] is, which is the story my dad can tell you what you’re meant to do, what you’re built for, how God made you, and then try to find the cleanest expression of that as you can. And for me, that’s a lot of why I pivoted over to venture capital, to start to realize, you know, not only do I love encouraging people, I love startups. I’m also like a wildly optimistic person. Just just I mean, I’ve learned to be very inquisitive, but I see the upside. I see the vision. I believe you. I think you can change. You know, I do all of the things that maybe other asset classes shouldn’t do, but at the preceding seed stage of what we should do. And so that’s what it means to me.

Britt Harris: Every time I go into a new company and this is my seventh one, the first thing I say is what kind of culture deal don I want to have? Because every great company has to define culture that’s extreme. Every great company has to define culture. That’s extreme. I’d say that’s about 10% of companies maximum. And so I say, you know, what kind of company, what kind of culture do you guys want to have? And every single time, as you can imagine, the top vote is work life balance every single time. You know, and so, I mean, I want work life balance, too. I’ve got lots of interests […] with my son, my granddaughters know I’ve got teaching. I got lots of things that I’d like to do, but I have to go and say to them, look, there are people in century, they’re working 24 seven and. If we think we’re in front and working 8 to 5 then, we’re either very naive or very arrogant. So we got to come up with a floor here that we can take advantage of in their plan. And I you know, I’ve run some of those teams. And it’s not actually 24 seven, but it’s close enough to them. It feels like 24 seven. And I also know these are the least efficient operations known to mankind. And it’s not that the work is super hard. It’s just super inefficient and it’s super slow. And, you know, Matt talked about if you know about what Scripture says, it says every one of us has got some set of spiritual gifts. I call it personal genius. And there like Goldman Sachs was a fine company. This is a typical example. You know, they’re doing everything by brute force. And like, you’re smart. We pay you a lot. You go over there and make it happen. And they’re not really you know, they’re getting better with not too concerned about what your stage of life is and what you really understand. They don’t do a lot of time optimizing like, what are you really good at? And so the way that we try to compete is we find out what everybody’s that. And you know, we don’t call them spiritual gifts, but through personal Jesus example, it all from God. By the way, I’m not sure everybody knows that Myers-Briggs, one of the two of them, was a Christian. And that whole yeah, the whole thing. There’s probably an enrollment which says gifts offering and it lifts all the gifts which one ever was read that scripture and thought, I wonder how we can make this, you know, more mechanical. And so let’s just say that work 10 hours a day, 10 hours a day, but they are in the area of personal genius and it feels like 5 to 10. But they get 20 into productivity. Because they’re in the flow with what God designed to do.

John Coleman: I’ve heard you touch on this before, this idea of giftedness. And in a related idea, I think about the narrow path. And you’ve talked about how Joseph demonstrates that so well.

Britt Harris: So there’s a scripture, the end of the Sermon on the Mount where Jesus is closing down and he says, Enter by the narrow gate. For wide the way and broad the path that leads to destruction, and most take it, but narrows the way and narrows the path that leads to life. And few find it. And so in both these college classes and with the people I’ve yet to develop, I just say, we’re trying to make you narrow path here. We are trying to make you narrow pathway. We need leaders who lead or led to life, lead their families to life, lead their communities to life, lead their companies to life and in some case their country to life. And if you say, well, no, there’s more people doing that than they’re doing this. Yeah, that’s exactly what Bob says. Yeah. Most leading to destruction, because they’re operating in the way the world works. There’s also a companion verse in Matthew Chapter nine, which is the battle chapter, Jesus say, not ready now. And there’s a verse where Jesus says, His disciples. You are sheep among wolves be as shrewd a serpent and as innocent as dove. This sounds what you are. A sheep. A sheep among wolves. Is Jesus telling us like you’re just going to go to slaughter here. No, he’s given a battle plan. He said, look how we’re going to defeat the wolves. Be as shrewd as serpent. And as innocent as dove. So. If go back to the fall, think about Truman’s nurses. They weren’t together, were they? There were shrewdness in the snake that were innocent to people, the shrewdness of the world defeat the innocence of people. Mm hmm. Is that the. Hey? Huh? You guys need to be shrewd as well. Not shrewd in the way the world, shrewd in God’s ways. That’s the story of Joseph. So the shrewdness of God [….] the shrewdness of the world. That doesn’t mean you totally ignore it. Like, if your football team is playing the national championship, you don’t just say, I don’t want to know anything about that other team. And then you get failed that linebackers all-American of they’re super aggressive but they got a really quick defensive back. But the guys are only five seven. And you say, all right, we’re going to run a lot of counter plays to offset their aggressiveness. I’m going to put three people on that linebacker and we’ve got a six foot seven guy to put on that five foot seven guy. And you’re using this as the example, of course, you know, using God’s wisdom, which will overcome the world’s wisdom and you conduct yourself blamelessly and you conduct yourself blamelessly. So shrewdness of God plus blameless dialog equals victory in a secular world. So the reason I want to talk about Joseph is there are several examples in the Bible of a CEO. Several Daniel, on your address but for me, Joseph is the best one. That was a great do, but I just want to see how God works. If you go read the scripture we meet, Joseph, when he’s 17 years old and here is Scripture, he is entitled, is lazy, is arrogant, is rude. His brothers hate him. His brothers hate him. And, you know, he even tells his parents to a dream like I’m better than you. Makes everybody furious. But his dad, at the end of that work says that knew about his dream. He kept that in mind. And I want you to listen to Joseph’s life, because we know that Joseph is going to be the second most important person in Egypt in 13 years time. We know that’s what could happen because we know the end of the story. And so just stand back and just let’s watch what happens. Joseph has three problems. His character is really low, he’s not in the right spot. And he has no experience whatsoever. So the first thing that happens to Joseph in the pit. In the pit. Guys and gals. I’m sure Joseph wasn’t completely transforming in that pit, but he was in process. There was no more arrogance. There was no more entitlement. There was no more laziness. God was changing his character, because he need to be changed for what God wanted him to do. And when he is being sold into slavery as a good option. You know when you’re going to get killed with other option. So it’s elements of slavery. Just I want to think about Joseph. And your essence is point just for rise up, Joe. Love, are you in God’s plan? Joseph. Joseph, are you on God’s plan? I gotcha. I I’m trying to be a man of faith, but I can’t.

John Coleman: He seems pretty off plan when you’re in the pit or when you’re being sold into slavery. Yeah.

Britt Harris: Yeah. But that’s where they go in. They’re going to Egypt, God has put him in position. And so the last thing is he needs to have managerial experience, not just he needs to have it, but needs to experience it. And that’s where we find out that this guy is a CEO. He’s loaded up with business. And this is a good thing for people like how can, you know, Christian can’t be successful in business because business is secular thing. That is the biggest myth and probably the single most terrible thing that gets Christians on the sidelines. There’s a think out to become a saint. You become of your true self. We can come back to that if you want to, but you become your false self because you think that’s going to make you successful and you’re going to crash and burn. You got to stay with your true self, which is God. And so we read the scripture, number one says, and God was with him, talk about Joseph, he’s in captivity. God was with him. And listen to this, he says, and he bless Potiphar’s house because of Joseph. God was with Joseph the whole time and he bless Potiphar’s house because of Joseph, and he goes to jail again. In Pharaoh’s Palace. Got his file. You’ve got your character, right? You’re in Egypt. You’ve got to manage your train. I’m going to put you right into position. And again, says, God is with him, this is what we got to remember. God is with you and God blesses other people because you’re there. And he interprets somebody’s dream. And the guy gets the job back under Pharaoh. And he says remember me. And he doesn’t. And there comes a day. When Pharaoh has a dream. It is a great time back in and I want everybody to realize he has the smartest guys in the world available to him. Who apparently had been able to interpret dreams before. And he turned to them Oxford, Stanford, Yale, Harvard. Guys what is this move? And they’re kind of like, we don’t get this when we don’t know. The world’s wisdom is incredible. It’s not super high, but it’s limited. And all of a sudden, this guy said, Oh, I remember there’s a guy back in the jail who interpreted my dream, and I want everybody to put themselves mentally into this spot. Joseph has been in captivity for 13 years. He did two things. This is what my message is for myself. Joseph did only two things. He continued to worship the Lord and he brought all of his gifts every day out into the world. He didn’t withhold his gifts and he didn’t capitulates to the world. He worship God and he brought his gifts. That is all he did that we know about. And he’s sitting over there, has no idea what’s happening. And I would imagine that Pharaoh dispatches a group of soldiers to go get him. And all of a sudden, you know, they ram down the doors and they like, who is Joseph? Everybody’s going. Because they think they’re all in trouble. Probably. Joseph looks at he is stunned. Come with us. Describe a very scary moment. And we don’t know the time. But let’s say 60 minutes later, he’s going to be standing in front of Pharaoh. Like you, 60 minutes from now. Wherever you are, you’re going to be standing in front of presiden Biden. You don’t know about. Didn’t know about till just now he’s filthy. They gotta clean him up, get him a new robe. He gets there. And Pharaoh says, I heard you interpret dreams. And what he says next blows my mind. Pharaoh says, I heard you interpret dreams. You know, he says, No, I can’t interpret dreams. And he must’ve been stunned. But then he says, But God can and he will interpert through me, that’s all this happening. God does things, you know, if we’re lucky, God does it through us and the nations in hell. And so Pharaoh gave him the whole dream. And I think what happened was. He knows the answer. I’m sure he looked over at these guys like. Really? No, I don’t want to. No answer. That’s not the answer. Here’s a little sidelight. Go ahead. You guys don’t get this one because Joseph is operating on a totally different level. He’s operating on God level. They’re up and out in the world. And it’s very easy to interpret the dream. Now, when that happens. What’s he supposed to do? Go stand by the wall. Stop talking. Salesmen may stop talking. Go stand by the wall. But he is loaded up with the gift of ministration. He is a business guy. He is a CEO, and I can almost see him there and will say anything until he can’t stand it. So this is what he got to do. You got to bring things into the barn. You got to have a security system. He lays out a strategic plan right there. Remember, he’s the only godly man maybe in the country, certainly anywhere in that room. And he’s just professed God and he’s just told them what to do. You are like, Oh, did not know, he’s a godly man, so they’re going to want him. Get rid of him. Christians who are operating with God’s plan are super viable, super viable. And Pharaoh says this is why he’s managing them. Okay, I get that part. What happens is what’s supposed to happen with these squirrely guys over here, the Harvard and Yale? There’s one thing. Just a second. Joseph. Pharaoh, could we talk to you for a minute? This guy just got here.

John Coleman: Yeah.

Britt Harris: Maybe we’re going a little too fast. Let’s make him an analyst. No. You know, even they say yes. This guy’s the wisest guy in the country. And they know he’s a man of God, right? They know it and they don’t care. They just know he’s fantastic and they want him on the team. And then Pharaoh says, you know, the most amazing thing, you know, it gives all ring, all that kind of stuff. And everybody saying, like, how can I influence my company? How can I change the culture in my department? Well, there’s no what Pharaoh says, owing to the only godly person. That we know about in the entire country, other than my word. From this day forward, this man’s word is law. This man’s word is law. The only guy persevering after he’d given up his true self. If he decided, you know, God’s treat me poorly. And I’m sure he had no idea what God was doing. But whatever is happening to us, God is not necessarily causing it. But he will use it for something that’s going to make you a totally different person and be ready for something in your future. And the world needs narrow path people. Christians, we’re never going to be in the majority. We’re not going to be a majority. We are the defense. You know, we’re the defense. We’re holding back with God, the evil that’s in the world. And so I kind of like this role of defender. Especially if I know Jesus is in front.

John Coleman: What a great word, Britt. And also reflects the lesson we talked about earlier where, you know, sometimes you have to have a humbling experience to know that you need compassion, that you need help to bring it to what we talked about earlier. You know, we are coming to the end of our time today. One of the things we like to ask folks as we close is just what they’re learning from God through scripture right now. And we just had a great example of some of that from Britt. Although after deep reflection, Matt, I was wondering if we could turn to you to close us out. What are you learning from God through His Scripture right now that you’d want to share with our audience?

Matt Harris: I mean, I think James is probably my favorite book in the Bible. And so, like, I’ve got three kids and one’s three months old. So the trials come to mind not only for that, but also, you know, we are in a tough time in the venture cycle and I’m having to have a lot of hard conversations with really good friends. And so these are trials that, you know, we’ll get through together and we’ll all be better off for. And another thing that I’ve been thinking a lot about is, you know, I’ve always thought there was kind of a controversy around what James says very bluntly, which is faith without works, is dead what I’ve been more focused on recently is that that’s actually a very prevalent theme in pretty much every book in the New Testament. And it’s not saying that you can earn your way into heaven. You know, he’s very clear that there’s an order to things. But I’ve just been thinking a lot about how, you know, I feel like I’m bursting at the seams faith wise, and I’m just kind of praying and looking for where else that’s going to come out and works. I’m focused on that.

Britt Harris: Just one thing I want to pass along I’ll be very short it’s that it’s been in my life and it’s just had a huge positive effect. And we have a deep culture here. And about a year ago, I was convicted to write in a new phrase, and the phrase I wrote in was, Speak the truth with love, to speak the truth with love. And I thought, you know, we got some great people here. And I don’t know how people to feel about this. This right out of the Bible. Well, it’s been the best thing we put in there because it really resonates with people because it’s three things. Do you speak? A lot of us don’t speak. So we may be able to tell the truth and we could do with love, but it doesn’t matter because we never speak. And we have to learn how to speak. And we have to allow them to speak. Now, the people, you know, like most of us, we speak all the time, but we don’t necessarily hold ourselves accountable for truth. That’s our problem. Or, you know, we speak the horrors of a camp where truth, but we do it in such an unloving way that nobody wants to hear. So every one of us has a problem. And one of these three areas. And like my company, we’re the second biggest endowment in country. So this is not a little bitty place. Everybody here is not a Christian. They’re all great people. This is God’s word, and it resonates. And believe it or not, I gave this instruction to the 100 scientists for this conference on climate change. So we’re going to operate on these principles. We’re going to speak the truth with love in whatever you believe. We’re going to get a chance to speak. But when you get up, don’t tell us it’s a fact if it’s not a fact. You tell us your story or it’s a fact. In almost all this story is. SMITH It’s kind of like this. They’ve done a lot of work, not home. And we’re going to speak with love. And at the end of this conference, we put in God’s word, five words, speak the truth with love into a totally secular, high IQ, high intelligence audience. I didn’t see this coming when I closed the conference and just started to walk off. There was a standing ovation from the entire crowd.

John Coleman: Wow.

Britt Harris: Innovation from the entire crowd. And you know why? It was because we had a conference where they spoke the truth with love.

John Coleman: That’s powerful. Matt Britt This has been wonderful. It’s been great to get to know you all, to hear your perspective on markets and certainly to hear your perspective about the integration of faith and work and how faith can manifest in investing. We are grateful for your time and hope we can have you back to the Faith Driven Investor podcast sometime. Thank you very much.

Britt Harris: We’d love it. Thank you.

John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman and I am here with my colleague Luke Roush. Luke, how are you doing today?

Luke Roush: I’m doing great. I’ve got a couple of great guests and fired up.

John Coleman: It is a couple of great guests today. We can say that very authentically. Always great guests on the Faith Driven Investor podcast. But particularly today, we welcome two very close friends of ours and extraordinary investors and influencers in the venture capital and growth equity space. Evan Baehr and James Tieng. Evan is the managing partner of Learn an education oriented venture capital firm. Evan has had a long and storied history, all that he and James talk about, but they actually were undergraduates at Princeton together and then graduate students at HBS together. And Evan has worked in a variety of capacities. James has been a venture investor for most of his professional career, at least recently, and has been a real leader in the education investing space across a number of different firms. I know he has a deep heart for education and then co-founded the firm Lumos with his partner Victor, just a couple of years ago. And now they’re a leader in growth equity, education, investing. And so we’re very excited to talk to both of them about investing in education, about venture capital and growth equity, and just about why they do what they do. James and Evan, welcome.

James Tieng: Thanks, John.

Evan Baehr: Good to be here, John.

John Coleman: Awesome. Well, I’m going to kick us off, guys, and I just want to just set the ball upfront. What does it mean to invest in education and what types of businesses are you looking at? When we talk about investing in education and maybe, James, you could kick us off.

James Tieng: Thanks, John. For us, and I think it is true for learn as well, it’s really about investing in companies across the full age spectrum of learning. So that covers early education into K-12, into traditional higher education and workforce development, which touches on things like upskilling, reskilling and even corporate learning and to invest in education for us and I believe for learn as well. It’s about driving outcomes from an academic standpoint for employment standpoint, broadening access and equity as it relates to everything that really is the ingredient for human flourishing through building the skills across the entire age spectrum could be a B-to-B company, a B to C company, domestic and or global. But that’s the catch all across a sector for us.

Evan Baehr: Agree with everything that James laid out. One misconception we hear a lot is that when you hear education, people think that you’re selling into K-12 schools. Really only about 20% of our companies, which is about 180 in total, actually directly provide services to K-12 schools. So obviously something like upskilling or corporate workforce training happens outside of the classroom. But we’re really into thinking about and recognizing that a lot of education happens not inside the walls of the classroom. And it doesn’t only happen when you’re young, so that means you get up in different places and different ages. A phrase that our firm co-founder Rob Hutter, uses. He says that we’re focused on investing in companies that innovate, in delivering payload to the brain. That’s a really unique definition of education, but will use sort of the space X analogy, right? So their amazing innovation is lowering the cost, cutting payload into outer space so you can ship all kinds of new things to outer space satellites, etc.. So if you imagine whatever payload we’re talking about, traditional, you might think of it as physics or math or the ability to build a welder or social emotional, whatever it is, we’re really interested in the innovative approaches of how you take whatever that core subject area or area of expertise is and how do you actually impart it on the brain. And so that explains why we might be in a medical device company that puts a helmet on your brain and spins tiny magnets that recalibrate your alpha brainwaves. Because if your brainwaves are not coordinated correctly, you’re not able to process information and impart it on your brain. And so when we step back and say it’s basically the case with the Internet that nearly all information in the world, all skills, all facts, anything you could possibly need is on the Internet right now for free, and almost no one does anything with it. So how do you wrestle through that, that it’s out there for free everywhere, but people are not soaking it up, learning it, and sort of changing their lives as a result.

John Coleman: That’s awesome, guys. And maybe just to dig into that really quickly. One step further, Evan, you mentioned a couple of specific applications there. We’d love to hear from both of you. Just examples. So give us a deeper understanding of this space. What are examples of a couple of the innovative companies you’re investing with or that you’ve seen in what they do so that listeners can kind of understand the breadth of that innovation more deeply?

Evan Baehr: So we’re invested and really involved in a company called Sharpen. They have secured the patent on a genetic test for dyslexia. So to a three year old child, you can do a mouth swab combined with family history and have a 90% accuracy of predicting if they will have developed dyslexia. So if they test positive at the age of three, the second half of what the company does is they acquired the most successful and largest off line reading intervention program and built an app to be able to deliver it digitally. So a trial that is screening to be likely dyslexic is essentially taught to read in a different way. And so you can imagine that from sort of a public health perspective, our society wide perspective, if you can screen and understand, I think early major driver of kids finding it difficult to read and to learn generally and then do the intervention, the intervention is far less expensive and far more effective when done at an earlier level. So, you know, when you think about genetic testing, you don’t normally think of, you know, an education company. But for us, it sort of helps stitch some of those concepts together.

James Tieng: One example I would have for you, John, is Transfer VR company that some of your investors have seen through some of the videos we’ve done with you. But it’s company that provides simulations delivered currently through VR headsets and related accessories that allows for a few different things. One is career discovery. So for kids and learners and aspiring workers to really touch and feel and experience, what is it like to work in the automotive plants, an aerospace manufacturing facility, even in a health care setting, etc. and to then to bring to bear real skills building and proficiencies that are demonstrable, that are accessible, such that when somebody gets through a program and realizes they have the interest in that specific field, they also have competencies that allow them to be more hirable once they step foot in that setting. And so an example would be working with an automotive manufacturer in Huntsville, Alabama, connecting the dots between K-12 community college and also workforce development boards to bring that talent to an employer.

Luke Roush: Those are great examples. You know, and I think actually some of our work around diagnosis, being able to diagnose either vision disorders or hearing disorders or dyslexia and then being able to intervene early allows people to become learners where they otherwise might be misdiagnosed as slow or some other form of special needs. I want to go back to just Simon Sinek and start with the why. Why did each of you guys wade into this space? Why is innovation in education important as you kind of vision here? What the next 20 or 30 years looks like? Maybe just speak a little bit about the impact that you believe educational innovation can have.

James Tieng: For me, it’s an accumulation or it’s an evolution that goes back prior to even attending business school, sitting down, you know, 15 plus years ago, thinking about life, think about which sectors gave me excitement and mission around where I can spend my time as an investor. And this was a bit more of a hypothesis, but this was what I articulated going into business school. And I remember having one transformative experience in business school, taking a course at HBC, taught by a woman named Stacy Childress around innovation in the sector. But this is going back many years ago. And so what is innovation, what does innovation look like? Back then it meant a palm pilot to assess literacy competencies. So innovation was very different, but that wasn’t lost on me in terms of the opportunity being just massive, in terms of the pain points that exist and had existed across every part of that learning spectrum that I mentioned and wanting to be a part of something that could really start to move the needle. And I know it’s hard work, but that also ties in eventually to why we’re all here today, which is our faith intersects so much with our work and our professional calling. And over time it just kept and pull me forward and forward up to the point of actually co-founding Lumos with another Faith Driven Investor. And so it’s really this evolution that has spanned nearly two decades now.

Evan Baehr: I am tiny in the relative scheme of giants on this call. Also, James has been doing this for decades. I’m newer directly into the education space. Joining this firm, we’re in capital. It ties in to a lot of the themes that I’ve been really interested in, which are both around venture building, but specifically around building venture backed tech enabled businesses that solve big public problems that tie in to really critical global macro issues. There’s a wonderful chart, I think Marc Andreessen called it the chart of the century, and it looks at essentially inflation across different bundles of goods over the last 20 years. And his great line is essentially the three components of the American dream are essentially up 100 to 200% in terms of inflation and the growth of the prices. The number one is hospital services, which is up 220%. But the two just below that are college tuition and fees and college textbooks. And so if you were to really ask the question, on one hand, there’s this sort of political economic side, which is like, what is the greatest existential threat to the United States as a nation state or Western nations in general to continue to drive their competition? Certainly our ability to educate not just higher ed, but K-12 would certainly be a huge one. So I find it very interesting from a geopolitical component, if we do not figure out how to und bankrupt, how we fund education and how we improve our education. We will absolutely no longer be a leading nation. We need to spend on the education side. The United States is number four in the world behind Luxembourg, Austria and Norway, and we’re ranked number 31. So something is really broken with how we spend money and how we produce results on more personal and sort of spiritual level. Rob as well, these great lines. And he said the following. You said, Why is it that we know more about the minerals under the ground of a tiny town in West Texas than we do about an African-American boy on the south side of Chicago in second grade. And it was this really cool tape to just say, gosh, the human person is this amazing, beautiful creature that has all this potential. But many of them, especially low income ones, the United States, we know so little about. And so that contrast of how we put all this brainpower or anything of stewarding a resource of crude oil into the ground relative to how we think about the children, you know, in our own family or in our own backyards was a really powerful one for me.

James Tieng: I’ll just add on to that. I mean, I mean, I think that’s a great example because it just showcases, you know, we’re all children of God and the often said talent being evenly distributed, but opportunity not. I think that is common amongst all of us, right. And to really just driving us forward to solve these very pressing issues you mentioned Evan.

John Coleman: Yeah. Let’s continue to dig into that because you touched on a couple of really important topics. I think there one is the power of the private sector to really solve public policy problems or social problems. And then secondly is a component of that impact. You know, and that dovetails with what we’re hearing a lot in the news today about ESG investing and values based investing, impact investing. What I hear you all talking about is not what I consider standard ESG principles, but rather aligned with your Christian faith, human flourishing, and really investing in people and the impact that you can have on those individual lives in the way in which they can further impact the world. Talk to me about how you think about impact in the context of your portfolio. And James, I know you have a formal screen on this or way of looking at this, so I’d love maybe to start with you, but how do you think about impact and how does that fit with the way that Christian investors should think about the impact of their capital?

James Tieng: It’s a great question, John. It is something that we thought about from the beginning and still think about regularly in terms of refining. What is the approach and sort of what is the level of accountability and reporting and where is this all going. But fundamentally, it started with three pillars that Victor and the whole team aligned with, which is each and every one of our companies, we want to really align with at least one, if not two. And all three would be kind of magical. But number one, again, I said outcomes. So do we have sufficiency of proof that whatever company we’re backing really does improve the status quo as it relates to academic and or employment outcomes? You can measure that with tests, grades, progression up to competencies, completion, graduation, employment rates, etc.. Number two, are we doing something about access that allows more people to capture those opportunities to get the skills they need to be successful during K-12 and higher ed, but more importantly to the ultimate job as well? And that’s not just about costs bringing down the cost for all the reasons Evan has just mentioned, but also the modality, because we all sit in different parts of the world. And this pandemic taught us very clearly that you don’t have to be somewhere necessarily to be productive and get to where you need to get to. And so allowing people from all different sort of walks of life wherever they are to get access to high quality education, and then somebody really think about equity from a couple of different lenses. But it really just. Is there a gap that systemically just exists today that need to be addressed and broken and reimagined? And are our companies really in service of that as well, whether it’s target populations or how we build out of those organizations to serve more and more people? So those are the three dimensions that we then had to create frameworks around, then create sort of systems internally and externally to allow us to do that. But it really comes down to those three pillars.

Evan Baehr: Yeah, just to pick up on the ESG frame. So we are very much in the conversation. A number of our LPs are coming from an impact perspective, and we have had a dedicated impact partner who only works on these topics from screening to supporting to reporting. So we take it really seriously and talk to LP prospects a lot about this attention that I’ve found in the sort of global conversation on ESG, maybe, I may, illustrated in the following example. So let’s say that a standard approach from a capital allocator to drive an ESG agenda would involve a survey asking about various factors of one of the companies we invest in. And those kinds of questions would be things like, you know, number or percentage of representatives of members of you know how many women, how many racial minorities, how many members of [….]. They would ask about the carbon production of the company itself. Does this startup of 12 people have solar panels on the roof? And I think there’s a little bit of something lost in translation here where if you’re coming at ESG from a sort of Fortune 1000 perspective, where the agent of attack is really changing the operating business, to say to Ford, you’ve got to put up solar panels like that, moves the needle to say to a startup, you’ve got to put up solar panels. It really annoys the founder and they probably go out of business. And so the way I like to think about it is let’s get to some of the underlying fundamental areas of human languishing, the opposite of human flourishing. Let’s expose what those are and let’s invite our best and brightest founders to build venture backed tech enabled companies to run after those problems. And so if your concern is carbon, your attack vector is not, does the company at all have solar panels? It is. Are they building a startup, which is this engine that combines a culture with talent, with risk capital, with a set of advisers around it that has the ability to scale solutions and deliver results like no corporate entity has ever in history. So we have opinions on it, and we get a lot of these survey questions and where we can try to nudge people to say, Hey, let’s start from first principles here. What are areas of human languishing and are we organizing the brightest minds and the best capital like a laser beam on those problems we all agree we want to solve?

Luke Roush: And so, I mean, one of the things you’re getting at is just this risk of scope creep where you start to the end. And and I think it’s layered on early stage companies in a way that may be distracting from their core primary mission. One of the things that I want to touch on, because both of you guys have been hinting around and we talked about primary education, secondary education, higher ed, skilled trades. I want to dig in on that last bucket of like skilled trades just sort of where we are. When you think about trying to correlate outcomes in preparing people for jobs, good paying jobs that also maybe circumvent the student debt trap that a lot of students find themselves in in higher ed. How are you guys thinking about skilled trades as investors in that space, whether it’s skilling or reskilling?

James Tieng: I would say we think a lot about sort of what is the ROI of education. And I think when you just look at the data, it’s clear that ROI is lacking in many of the traditional pathways. And so the opportunity for data and technology and innovation to drive forward to have a better matching system, you know, has been true for many years and sits in front of us right now. Still, the massive opportunity, right? You look at student loan debt as one indicator of the problems of how most people have kind of gone through called this the traditional pathways or you look at the for profit post-secondary world that crashed a bit when it got overextended in terms of what it looked like. But ultimately, what are we all trying to do? We’re trying to find the right pathways for the right people to embark on that career journey that does create that sustainable life ahead. Right? Because we all know that, you know, depending where you sit in the US right now, being a lineman might be a transformative career for you relative to where you are now. You have kind of direct exposure to that and we respect that work deeply. But that is true in so many different professions that, you know, blue collar, white collar, whatever it is. So you got to guide people the right way. And that does start in K-12, right? It starts because you need exposure to these professions that you’re not entering that decision point of, do I go to college or not? You know, not understanding what you’re actually trying to get to, Right. And then once you get to college, you need further guidance to get to the right place so that it is a fulfilling career, but also a sustainable one where you can meet all the ambitions you might have in terms of raising a family and providing for a family and whatnot. And there are so many complexities of what that looks like. And I think that is something that we all have to be aware of as investors and backing these entrepreneurs, because it can’t be a concentrated bet on something that only serves the person that will ultimately be a web developer, for example. That is certainly a need that has been felt over the years. But many of these other professions have been under med health care, included blue collar jobs that touch on electrician work. In fact, all these things that we’ve seen this part of the country. So I think you just need to have that broader lens of what that all means.

Evan Baehr: My friend Wyatt Smith has built a business called up Smith right in this space has taught me a lot about this. And just a glaring stat that he points out is that for every one skilled tradesman that enters the workforce in the United States, four are retiring. And the way he phrases that I think is really amazing. He thinks that the United States, when you think about higher ed in STEM, remains definitely in the top five of producing credentials to preserve the United States as a designer nation. We are able to design things. We can generate intellectual property. We are already falling behind and are at risk of losing our ability to be a maker nation and especially set against a backdrop of repatriation of whether it’s ingredients for pharmaceuticals or semiconductors or other things that we now see greater geopolitical realm. That is a huge challenge. And the stats, as I dug more into it, NCIS did a survey and suggest that 23% of American adults, about one in four, are functionally illiterate. So the state of education among America’s workforce is pretty appalling. So when you think our scores on a PISA, for example, have us at 37, that’s been around for 20, 30 years, meaning 30 years, a 50 year old who graduated ranked number 37 is functioning, literate, is not able to contribute to workforce in a practical way that generates economic outcome, in a way that produces a work and an income that gives them dignity. So there’s a lot to be figured out here.

John Coleman: Yeah. And I love that you tied in the global perspective, too. And James touched on this. I do love the phrase talent is universal, opportunity is not. And a lot of this discussion is, you know, the college market or the four year college market is such an incredibly small portion of the global education framework. Right. And whether in the U.S. or abroad, the opportunity to reach people for the critical needs in their communities around the world with differentiated learning programs that can be lower cost, that are lower time intensity, I think is just a remarkable way to move the needle on giving more people opportunity globally and also meeting the critical infrastructure needs from a public policy perspective. Evan as you mentioned of countries around the world. I might pivot just a moment here. So both of you are in venture and in growth equity right now. Obviously, it’s a relatively tumultuous time in markets. We’ve seen changes in valuation in that space. We’ve seen some concerns about the space, the potential that we’re headed into a recessionary period here in 2023. How do you think about the reset that you’ve seen in venture and growth equity this year? And why do you think this is still an important place to play?

James Tieng: I think even a more holistic approach, by the way. And so, you know, we set out as a private equity firm that would invest at the growth stage. And that one distinction allows us to have the flexibility to do growth recapitalizations, if not buyouts as well. And so I do think that as the world normalizes for all the reasons that you described in terms of the stock market valuations and also just what’s happening on a lagged basis with many of the venture back in growth backed businesses as well. There’s going to be ripeness for doing very interesting deals at valuations that frankly will feel more sane versus the froth of several years ago. And so as an entry point sort of time period, this should be quite good. And you can look at obviously every sort of recessionary period that we’ve seen in decades, and there’s always been good vintages of private equity and other investing that emerge. And so I think that is one thing that’s going to happen or has been happening through this year and certainly into next year that will benefit LPs. It’ll benefit us in terms of be able to create value over time. But you do need a long term mindset in that right there. Think about one, two, three year windows. It’s hard to time the market, but I think all of us here, we have a long term mindset. We have a capital base that allows us to kind of spread across different cycles. And so we are seeing that correction and believe that there will be a net benefit in this kind of coming few years.

Evan Baehr: And look, times of recession, capital scarcity, having to trim and think about capital efficiency, there’s history for really amazing companies emerging out of downturns in the 2008 nine recession at WhatsApp, Instagram, Groupon, Uber, Slack, Square, Venmo like pretty epic market capital by companies that were developed during that time. They’re probably the most extreme example is obviously the massive firings, layoffs, resignations, whatever you want to say at Twitter. And it’s like, wow, they seem to be shipping more product improvements more quickly than they did before with five times the people. So might be a little extreme, but there are ways to do heroic things in times of cuts.

John Coleman: Well, and you know, I used to work with a great venture investor named Evan Dar and Evan pointed out on the ground what happens during periods like this where valuations come down and where there are layoffs at tech companies, etc., is that creates the framework for people to leave and start companies? Because the problem, when values are rising and you’ve got options is you got golden handcuffs at the big tech companies, right? In a period where the stock prices have collapsed and those options are no longer valuable or they’re indeed doing layoffs, a number of really good people then have the freedom to leave and go start their own thing with less risk or leaving less money on the table. And so it does enable this cycle where in periods like the late nineties, early 2000, during the great financial crisis and potentially now you see this burst of innovation of new company founding, a really intelligent people, leaving big corporate jobs to go do something interesting. And I’m interested to see if all these waves of people leaving Meta or Twitter or others or the folks who are leaving voluntarily because their options aren’t worth something are going to spur a similar wave of innovation now.

James Tieng: And I will say, I mean, it may not be as quite epic as the floods and, you know, Noah’s Ark and whatnot, but I mean, there is kind of back to faith for a moment. I mean, God humbling all of our hearts at this moment. Right. Is an important correction that just everybody needs more and more. And it just you know, you look around sort of the past few years and there was just such unbridled behavior, unconstrained behaviors that, you know, when it’s too good, you lose sight of certain things, whether it’s like cash flow management or sustainable business building or whatnot. But I think having that humility, reintroducing the system, at least for those of us that are accepting of it, I think that is a critical time to. Really just reflect and retool and continue in this kind of path forward.

Luke Roush: I want to hear just each of you is really serious about your Christian faith, and I’m sure that is reflected in how you shepherd capital. Love to just understand kind of why that is important to you and how that influences and shapes your role as a capital allocator and ultimately as a counselor to many of the companies that you’re investing.

Evan Baehr: There’s a line from a mentor across Praxis, which many of us are tied into, and they do really great work helping me and others think more deeply about this. And this investor likes to ask the question, Will your business exist in heaven? Now, that’s probably not a question that most investors should ask. It’s not when I ask. There’s all sorts of reasons you may not want to do that, but it’s an interesting thought exercise to think about if a version of heaven is heaven on earth. It is people with work and in marriages and going places and doing stuff and making stuff. What would this company look like in an Edenic state if heaven came back to earth? How would this company exist? I don’t use that as an investment criteria, but I do like that. It draws us to what are the garden look like? What were the conditions of it? How did humanity flourish when it was in the garden? And I want to believe that when you find a company that truly in the long term drives the human flourishing of its employees, its investors and its users, probably the largest base. I believe that in a long arc of capitalism will reward that company in market cap. The short term it may not, but in long term I think it will. So I think even as an investment criteria, does this company drive the flourishing of the users? Are they operating and living in a way that they were intended to live? If there were a handbook, a playbook, a user’s manual for the human person? Does this help them live more as they were made? Tim Keller line of work is definition of work is following, he says quotation definition of work is rearranging the raw material of God’s creation in such a way that it helps the world in general and people in particular thrive and flourish. So our work as investors rearranging the raw material God, we’re taking various forms of capital, financial capital, human capital, spiritual capital, rearranging them in ways and kneedings and encouragement and high fives. And I can’t believe your company died. Hey, I kill your company soul so that they flourish. Gives me excited to bring these conversations into the context of how we allocate capital.

John Coleman: man Evan Baehr dropping some deeply philosophic truth bombs here on the FDI podcast.

Evan Baehr: John on that one. Question would the FDI podcast exist in heaven?

John Coleman: I think the FDI podcast would exist, but it probably wouldn’t be hosted by me. Would that be? I think they could do better. I have a feeling there are some great people up there. So we’re going to close in just a debt asking you guys what you’re learning through scripture. Before we do that, we’re going to do something fun we call Lightning Round, and we’re going to ask you guys simple questions and look for kind of short answers in 60 seconds or less. Some of these may be serious, some of them maybe less serious. I’ll start us on a semi-serious one, which is, as you look around education right now, what is the innovation you’re most excited about over the next 2 to 3 years? James, we’ll start with you.

James Tieng: It’s a really tough question. I am excited by apprenticeships applied more broadly than they have been globally, but certainly in the US, and that’s not a bleeding edge sort of, you know, metaverse type thing. It’s really just the idea that we have so much more to do to my earlier points around bridging education to employment and so practical skills training and even on a paid basis, allowing people to really get their hands on the meat and substance of work will just be transformative. And we can embrace that globally, but certainly just in the US right now. And so I realize that’s not really a tech forward. I mean, there’s a lot of tech ways to bring that to bear, but that’s a simple concept that I think is very disruptive still.

Evan Baehr: We are at the beginning of a massive change of public opinion and public policy in the United States that will radically change to make it so that money follows child. When that happened to the form of charter voucher […] Or other policy instruments, it invites entrepreneurs to create all kinds of solutions that we can’t even imagine today. And what used to be more of a partizan issue is in really amazing ways, because we know when parents have more control and educators have to compete. Results dramatically grow. So that’s sort of the meta issue I’m really excited about. I think invites more founders into the space on the backside of massive […] voucher, charter, etc.. I think we need a whole new generation of entrepreneurs who want to build schools. There’s a challenge of people that come in to build schools. They’re often from a nonprofit background that are often teachers. If you’re a teacher, it doesn’t mean you can’t be an entrepreneur. It’s just very different skill sets. And so we learn, spend a lot of time thinking about on the back end of a massive wave of millions of parents getting to choose where the kids go to school. How are we going to build the supply chain to generate all kinds of new school concepts that are scalable and kept most aggressive year? They built three schools. One of our companies, New Globe, which powers of micro schools across Africa, has a contract provider for the government. So Kip’s biggest year of preschool last year, new globe built 3800 schools for profit venture backed companies have the ability to scale. And that’s really what we need to talk about mass education, especially of low income people, obviously in their states, but certainly 10-20 x that around the world.

John Coleman: An extraordinary answer in greater than 60 seconds. So I’m giving that round to James over to you Luke.

Evan Baehr: Hey, your podcast will not exist in heaven. John will never.

Luke Roush: Be so one example in 30 seconds or less for each of a benefit in a risk of remote or virtual education.

James Tieng: Benefits clearly is just you can be anywhere at any time. Risk is that people element. I mean in K 12, we understand to be like that high quality teacher that transforms lives and I guess just gets played out across all of education. So losing that in-person element is the biggest risk for my perspective.

Evan Baehr: I just air on the risk side, McKinsey report out suggests that the extended COVID school lockdowns and alleged Zoom classroom from home has an estimated about an additional 1.6 million students dropping out from high school because of learning loss.

John Coleman: Unreal.

Evan Baehr: Take that one John.

Luke Roush: Man you made up for the long answer the first time Evan, I’ve got one more.

John Coleman: It is very concise. Go ahead, Luke.

Luke Roush: So about this time of the year, every year Spotify comes out with kind of the rap. It’s sort of like your year rap. Who showed up more in your playlist, Justin Bieber or Taylor Swift, please. James, to you first.

James Tieng: Neither because my top ten were all Lauren Daigle songs. So you could go, Oh.

Luke Roush: Okay.

Evan Baehr: Lauren Daigle. Really? That’s right. Well, all of my top ones were Michael W Smith and just kidding just kidding. Okay. Mine’s definitely. Taylor Swift. My son is a big Taylor Swift fan. I spend about 6 hours during the great Ticketmaster controversy waiting in the ticketmaster line to get the tickets. And we did secure tickets. We’re going in a few months. And I only had to sell my third child to afford them.

John Coleman: And Luke, this is a fundamentally silly question. I mean, in a year when Taylor Swift releases a banger like Midnight 3 a.m. Edition, I think there’s only one appropriate response to that. Question. I know you’ve been doing your Turnstyle with the Bee Gees on repeat for the entire holiday. Well, we are going to wrap up now. That was great Lightning round. Before we leave, we like to ask every guest just to share with listeners something that they’re learning through Scripture right now in their faith that they’d like to share with others. And Evan, maybe we’ll start with you and end with James.

Evan Baehr: I’ll just offer this contrast to a good friend of mine. Joel Bryce has been preaching and thinking a lot about human flourishing and the nature of work and where those concepts emerge in Scripture. And he taught me the following two definitions, which I’ll just leave with you guys. And so there’s two notions of work translated versus agathos. And this version of work is that many people sort of set our hearts to this. It is good work, it is good natured, is well-intentioned, and even can do good in the world, is a different kind of work from the word kalos, and that is work only possible after the gospel message has transformed the human heart. And this kind of good work it is a beautiful work. It’s work that creates beauty on the outside after a transformation has happened to make the inside beautiful as well.

James Tieng: Mm hmm. For me, you know, it’s been a year where I think my heart has been closer to Scripture than many years. I lost a parent this year, and that kind of put a lot of weight to sort through kind of of those questions of aging and end of life. This one isn’t specifically about that. But as I shift through kind of many of the different passages I reflect on this year, one is from the Billy Graham Center on that hike that I think I saw you jogging on John back in February, but it’s from Psalm 145. The Lord is near to all who call on him to all that call on him in truth. And this year has been just complex because of all that going on. And I’ve had to distill it into the simplest way to pray when it’s the hardest to pray. Right? And it’s simple for me because I boil it down to simple statements that I can say both in my heart and out loud. I am listening. I surrender to you, Lord, and I need you. And I boil it down to that because we need to call on God to be present our lives. You know, we can sit back and be passive Christians or we can actually call on him. And that is such a powerful way to approach prayer.

Luke Roush: On that note, we are grateful, Evan and James, for you being able to participate with us on this podcast. You know, our view is that almost any business can be creative or redemptive or restorative, but there are certain types of businesses that have unique potential to really impact the world and humanity and what human flourishing looks like. And certainly businesses in the educational sector fall in that category. So we’re grateful for you and appreciate you taking the time to be with us.

James Tieng: Thank you both.

Evan Baehr: Thanks, guys.

Jacktone: Welcome back to the Faith Driven Entrepreneur Africa podcast. We are committed to spotlighting the voices of entrepreneurs and innovators shaping the marketplace in our countries across this vast continent. This week we’re featuring Kola Aina. Kola is the founding partner at Ventures platform and early stage discovery venture capital funding championing the next generation of African entrepreneurs. He’s a leading executive and board director who combines a powerful mix of entrepreneurial investment and technical experience across diverse industries, including technology, finance, media, agriculture, infrastructure and real estate. As a venture capitalist, Kola identifies and invests in early stage technology companies focused on the disruption of financial services, healthcare, education, agriculture and enterprise software. He has built a strong investment portfolio of best in class high growth companies. We are excited to talk to Kola about the makings of a good deal and how good work contributes to more flourishing communities.

Henry Kaestner: Welcome back to the Faith Driven Entrepreneur Africa podcast. We are in the early days here and I’m with as always with my co host Ndidi, Ndidi. Good morning. Even though it’s not morning.

Ndidi Nwuneli: Good afternoon. Good evening.

Henry Kaestner: Exactly. Ndidi, when we talk last, you and Reuben, who joined us on our first podcast, it encouraged me to listen to some more African music. And we had talked about so many folks in the United States, in the West think of getting involved in Africa through the lens of Bob Geldof and U2. And the challenge was, for me, the upserper on this podcast that’s coming from the West, but has a great passion and great love for Africa to be able to be brought up to speed more of my music. And so I listened to Burna Boy, and I think I need to keep on listening because it’s not exactly my type of music, but I need to get broadened out beyond, I guess, Lady Black and Bozo and Shot. A I know that there are lots of things that I and so much of our audience need to learn about African music. But this is also a good time to mention the fact that this podcast is primarily while we expect that a lot of folks will come over from our Faith Driven Entrepreneur, our Podcasts and our Faith Driven Investor podcast, which are, to be clear, global listen to in 130 countries, it does kind of skew to the West. So we anticipate that some folks from our audience that are interested in Africa will come over, but it’s primarily for African entrepreneurs, so they might see what God is doing in the marketplace, be encouraged by their brothers and sisters in Africa. And there’s no better way to do that, no better leader to lead us through that than you Ndidi, Ndidi, thank you very much for being with us again.

Ndidi Nwuneli: My pleasure, Henry. And thank you for this wonderful opportunity.

Henry Kaestner: We’ve got a great guest today. We’ve got a guy that really embodies so much of the spirit of what God has done through this movement that we have Faith Driven Entrepreneur Faith Driven Investor. And for those of you who are coming in new into the family, Faith Driven Entrepreneur and Faith Driven Investor are these decentralized movements that involve lots of great organizations and ministries from around the world. We have, I don’t know, maybe a dozen or so great ministries just in Africa alone that have all coalesced around this concept in the spirit of a shared cultural DNA of Christian business owners and entrepreneurs around the world, which include things like the identity in Christ, our call to create and daring to be faithful versus willful, etc. But we’ve got a great opportunity to be able to shed light on what’s going on in the continent through a person who is an entrepreneur and an investor. And so, Kola, welcome to the program.

Kola Aina: Thank you for having me. Henry Delighted to be here and to share and learn, but really just happy to get the chat going and share some of what God is doing on this end.

Henry Kaestner: Excellent. Ndidi is going to lead us through a lot of that. But before we get started, one of the things we like to do with all of our guests is get a biographical flyover. Who are you? Where do you come from? How has faith been brought into your life with time? And then we’ll get into meet of that. But give us a flyover, please.

Kola Aina: Yeah, sure. Kola is my name, Nigerian citizen. I was born in Lagos, but my family very quickly, like most like lots of families, moved to the northern part of Nigeria, precisely Kano in the first instance and then Kaduna. My father worked serving as a corporate salesman and then very quickly became a bottling entrepreneur. I like to say I grew up in a start up family because I would watch my dad go from business to business, and at some point he would have three different enterprises run at the same time. And so my life as a kid was between so watching my parents start businesses and turning in those businesses and going to church. It was very much a regulated upbringing that I went through. Very quickly because I’m the first of five kids, my dad ensured I got really involved in family business. I went to boarding school and my mom will always tell me, remember the son of whom you are, you know? And if you know anything about the you’re about culture, you know, there’s a huge responsibility on the first child to not sully the family name. Hmm. Very quickly as well. I grew up, you know, one of my dad’s most repeated sayings is a phrase I like very much. And it goes like this My father, God takes care of me in grand style. And, you know, because he was swinging so far out, taking so much risk both in businesses and extremely leveraged himself, he would always sort of declare this extreme levels of faith in God and what God was doing, you know, in his new businesses, that very quickly, I begun to see a direct correlation between my faith and the work that I did. And so that was sort of my upbringing. You know, growing up in Kaduna I went up to engineering school in the U.S. I went to business school, walked in, you know, corporate. But I always had this nagging desire to come back to Nigeria to be a part of, you know, how my country got better. And in 2009, I finally made that bold move, move back to Nigeria. I met my wife shortly after I got married. And as I say, the rest is history while I was in school certainly got carried away at some point as well as most young men do. But, you know, God bless my mother. She had put in so much work and instilling the fear of God in us as kids that even when we sort of, you know, got carried away, we always had a center. Right. And my mom would send us devotionals all the way from Kaduna to wherever we were in the world. You know, I definitely invested a great deal in my Christian journey once I gave my life to Christ in my teens. And so I’ll pause there. Happy to sort of continue the conversation all the way to where I am today.

Henry Kaestner: I think that’d be great. Yeah. So the question on my mind and I’m trying to place your accent, did you go to school in the States?

Kola Aina: I did, yes. I went to school in a small town called Savannah, Georgia.

Henry Kaestner: Yeah.

Kola Aina: And that’s because, you know, my my mom and I were plotting how I would go to school in the U.S. and my dad didn’t know about it. I got admitted, got a scholarship to study graphic design at a school in Savannah, a leading design school. And my dad, my dad kicked against that and said, no way. My son went to study design. And so I ended up it had to be in Savannah because we had family in Savannah, Georgia. And so I ended up at Savannah State University in Savannah, where I went for engineering school and moved out west to Bowling Green State, Ohio for my master’s. And yeah, my accent is a mix of different twangs. Very, very nice.

Henry Kaestner: Do you say y’all. Can you do that?

Kola Aina: I do. I do. I I’m quite the Southern boy, you know.

Henry Kaestner: That’s great. Okay, so you’re back to Nigeria and you said 2009.

Kola Aina: Yes.

Henry Kaestner: And then you started your own career. Give us flyover of your career and what you’ve done professionally till now.

Kola Aina: Yeah. So, no, I didn’t quite start my career right off the back. My first move back to Nigeria was my dad had asked me to he was looking to retire and in a move back to help run the family business, you know, until we worked together for a year and a half. But, you know, I had invested quite a bit of time in trying to understand the purpose of my life and what I was for. And, you know, I was one of those obsessive, purpose driven Life readers. The book by Rick Warren. Yeah. You know, the time I probably read it like five times. You know, I’d read the journal, I read all the versions of the book, you know, and I’d come to a clear realization what the purpose of my life was at the time I called it the way I coined it was the purpose of my life is to build platforms to enable other people. You know, it was pretty crystal clear. You know, most people are not that fortunate to have that level of clarity. I’m grateful to God for that insight that I had. And so I spent a year and a half working in my family. Business was a large publishing concern, but I always felt this hollow in my heart, you know? And I wasn’t doing what I really wanted to do. And so I left the family business a year and a half. And that’s always a difficult thing to do. As you can imagine, leaving the family business been the first born child and I initially relocated back to the U.S. when my family had a really rough patch, you know, a bit of a dry spell trying to figure out what next. And was in that time actually at a church program? At a church event? In DC that I met my co-founder. A gentleman by the name Chuka Esei Nigerian American. And we decided we were going to start a technology business that would build open source software for midsize businesses and, you know, development agencies and governments in Africa. At the time, you either were dealing with, you know, the large the Microsoft Oracles of this world or you were dealing with some random, small or random guy, you know, with a backpack to build your technology. And that had low risk with it. And so, you know, we decided we’ll start this open source technology company. He wasn’t going to move back. I decided to move back to Nigeria, started the company called Emerging Platforms and back to my idea of building platforms. And we had a really basic idea. We were going to build a platform to enable people and ideas emerge. It sounds kind of silly now thinking about it, you know, and came back.

Henry Kaestner: What sounds silly about it?

Henry Kaestner: It sounds awesome.

Kola Aina: Well, yeah. I mean, the logo as well had a line in the middle emerging was on top and platforms was beneath. I mean it was quite literal until we came back and you know, we started looking at different sectors. The education sector was one sector we focused on. And for instance, in education, we would walk to universities to take their courses online, enable them collect payments, ease the process for students to apply and get admitted. This was all manual, right before the time we started doing this. And, you know, God blessed our efforts. It was really tough. We didn’t have any funding. I couldn’t go back to my family for funding because I had been a a bit of a rebel, but I was convinced this was what God wanted me to do. I was convinced I was pursuing the purpose of my life. My mom was sort of in alignment. My dad eventually came around and, you know, it was a really slow process. I mean, fast forward today, it’s so easy to raise venture capital. At the time we started, there was no venture capital for the kind of business I was running. I was a software business right in Nigeria until was essentially funded the business off of customers, which is the way businesses traditionally are built, one customer after the other. And then in 2013, I really started getting curious about the role technology could play in making Nigeria a better country, you know, and a much more prosperous country. And that led me to start sort of angel investing in other sectors I was interested in, but didn’t feel I could personally pursue ideas in. And that, you know, very quickly, my angel portfolio grew to, you know, initially about 15 companies or so. And then I felt I needed a proper structure to manage those companies. And that really was what inspired venture platform being formed in 2016. Today we are one of the most prolific early stage funds in the region. We play a discovery role. Essentially, we’re discovery fund. We identify high potential companies early that we believe can be transformational. And I can talk a little bit more about thesis down the road, but we backed them early on. We help them scale. And this is with a Pan-African mandate with the goal that these entrepreneurs would, one, create new markets that ultimately allows the vast majority of Africans who are generally low income access the goods and services they need. By so doing, we can start to increase prosperity on the continent. But more importantly, when those founders themselves exit and make a success of their businesses, we start to unlock what I like to call righteous capital, right capital that is disconnected from the legacy wealth in Nigeria and in Africa. That really starts to impact the kind of change we need. Until I can impact that as a whole. But that’s the ultimate goal for why we invest and why invest now.

Ndidi Nwuneli: I love that Kola, really inspiring and I love how you’ve evolved through your story and one experience has built on the next that’s very inspiring. You know, when you talk about Nigeria, you made a bet on Nigeria, you made a bet on Africa. Your co-founder didn’t want to come back, but you did. What excites you about Africa? Why do you see what others don’t see and what opportunities have you seen that have kept you motivated and going?

Kola Aina: I think at the time in the early 2000, you know, when I moved back, what excited me was more the possibility what was yet undone. Right. You know, using my family business as an example, my family had this large printing business. And if you wanted to print anything, you. You would have to travel all the way to the press in Kaduna physically. But in the US we had the Kinko’s stores everywhere. And you come in, we could drive and you could produce it, you know? And I would tell my dad, I, look, I think the future of printing is going to be real time. Like literally everyone will print all over the, you know, and so being in the US gave me an opportunity and because I kept in touch with Africa, I was very much aware of the gaps that existed and I had a burning desire to try to bridge some of those gaps. And you can say that perspective was based off of my youth and sort of my desire to create nicer things on the continent. Today, it’s a more urgent mission. You know, Africa has one of the fastest growing populations, a largely youthful population and, you know, the largest concentration of poverty in the world. And ultimately, we have to create prosperity at scale, you know, because that’s how you solve for insecurity. That’s how you solve for terrorism. It’s all connected. And so for me, I see a real opportunity to utilize innovation and capital to create new markets that enable more people, gain access to the goods and services they need. You know, and when people have access, they gain agency, right? They become citizens that have agency and then they start to hold governments accountable, right? And then they become more empowered. And so this is as much as it’s, you know, venture capital strategy, the ultimate goal is to empower people and really build prosperity on the continent.

Ndidi Nwuneli: That’s really excellent. You know, when you think about catalytic capital and I love the term righteous capital, we would love to unpack that some more. But you mentioned innovation. You know, and innovation is critical in landscapes where there are still evolving sectors and growth sectors. So when you think about innovation, what does it mean to you and how have you built that culture within your own company and the companies you’ve invested in?

Kola Aina: Yeah, I think the topic of innovation is a super interesting one and it took us a while to, like I said in the early days, I was very excited about the shiny things that you find in the West at the time you couldn’t quite find in Nigeria or in Africa. I mean, I was shocked you to know that until 2016, when we invested in Paystack and Paystack launched a payment company, it was really hard to set up online payments for any business. But today our thinking around innovation has evolved to where we are interested in a particular kind of innovation. You know, it’s described as a market creating innovation, right? Because that kind of innovation essentially creates a new market that is more accessible. So it’s really not about enhancing the products. For instance, every time a new version of Henry’s mic that’s recording this podcast gets released or like an iPhone, you know, you get millions of people buying it. While the majority of the folks here on the continent don’t need a new iPhone, they just need a phone right to communicate on to find out the price of wheat in the market. And so for us, it’s really about investing in the kinds of innovation that allow the vast majority of people on the continent gain access to healthcare, to education, to, you know, to housing. And that’s why we are very specific thesis is very specific about the kinds of innovations that we like to support. And another way to put it is we are looking to back painkillers and not vitamins. And we think by backing those types of companies, we can not only make an impact here on the continent, but also create the outcomes around righteous capital that we talked about early.

Ndidi Nwuneli: At least I love that you’re addressing painkillers and vitamins I would like to dig into that a bit more because there’s a lot of temptation in the sector that you’re in VC to back those vitamins and the shiny new things. And, you know, Paystack has been extremely successful. Right. So how do you stick to that frame and stay grounded and rooted in your vision?

Kola Aina: Well, again, I guess it’s ultimately why I started, right. And for me, I consider the work I do in college, you know, because I could do this. I often tell there’s so many simpler ways to earn a living. Venture is actually really hard, you know? But it is a way that I feel a sense of responsibility. You know, and I like to think about careers as spheres of influence. I feel like God’s kingdom needs to be viewed as different spheres. And we get put in those spheres to dominate and to influence. And so my role and our role as Ventures platform is to do venture in a kind of way and venture that produces a kind of outcome.

Henry Kaestner: But you hit on something there that’s worth just just looking in a little bit more. You don’t hear that a lot from Christ followers talking about domination. You know, you’re getting something that’s very much from Genesis. It’s the creation mandate as to take dominion over all things and to claim it in the name of God and do it for the advancement of his kingdom, for his power under his for his glory. But when you talk about the creative process in innovation and maybe this is part of your design base, but lean into it a little bit more because we don’t hear that much. What do you mean about dominate? I like that.

Kola Aina: Yeah, I think as Christians, we are meant to dominate our sphere of influence as long as we’re dominating for the right reasons. Right. You know, my role is to try to establish the kingdom of God through the work that I do right here on Earth by dominating for the right reasons. Not necessarily. I mean, how much can I possibly need? how much do I possibly need. Right. But we have to minister to people through like when a jobless, young Nigerian is finally able to launch her online store because of paystack or flutterwave. That is impact right on. You know, I think as we spread the gospel, as we inspire people to give their lives to Christ, we also have to sort of reduce poverty and then show people, you know, can live a decent, modest life. And so that’s the way I view dominating, and connecting that to sort of genesis, which was an expressed sort of desire of God. Where I struggle with it is when the domination is for the wrong reasons, for personal gain and whatnot. And so and I learned that early because, growing up my dad had this library was full of books, autobiographies and lots of Christian books. And I remember once picking a book from his library called the Bible MBA, you know, and I quickly realized that there’s the way the world does business and that’s the way we do business. Right. And, you know, I think it sort of permeates the company culture, the policies and sort of how we operate in the market. So, for instance, when we launched our fund, we were very keen on being transparent and giving a fair deal because we felt, yeah, we may not necessarily insist that we would only fund Christians, right? But if our terms are fair and transparent and we don’t try to invest with any funny terms and play any games, that’s one way to let our light shine, right? And people get closer to us and they want to know who we are, why we believe, what we believe. That’s one way that we minister and the work that we do.

Henry Kaestner: I think that’s beautiful. I want to come back into the concept of righteous capital and building and taking dominion over all things for the support of building about an ecosystem that points to God. And I get a sense that you do some of that with the foundation that you have. Can you talk to us about the foundation? You don’t see a lot of foundations associated with relatively new venture capital funds. You see it maybe with Andreessen Horowitz or Bessemer or U.S.V.P or Battery, you know, when they’ve got billions and billions of dollars under management. But I get a sense that you have this philanthropic mindset in investing back into the ecosystem, and that was around since the beginning. Talk to us about that.

Kola Aina: Yeah. That’s great. Yeah, it’s counter-intuitive, right? I mean, who stocks foundation for a fund off of the first fund where you barely have any fees. But again, we came to this, our first few investments were all proprietary capital, right? So it was I had the technology business that had done really well and we decided we carved out a part of capital to invest. And very quickly we realized that there was so much ecosystem development that needed to be done if we would invest successfully in companies. You know, 2016, where we started, you would struggle to find high quality deal flow as we now have. And so in the early days, the mandate of our foundation was to invest in entrepreneurs that were not yet investment ready. Right? How could we help them sort of scale up their ideas? And in parts of the country, not Lagos, you know, for instance, I grew up in Kaduna, so I always had a heart for that. I’ve always had a heart for that part of the country, which, as you may know, is northern and mostly Muslim. Right. And again, this is part of letting our light shine. And so we set up there and we were doing campus outreach, helping campus students with their ideas, you know, teaching them how to start a startup and whatnot. Today, the ecosystem has changed significantly, and obviously we started funding the foundation off of our very meager fees. And I initially did a grant to the foundation to a set of grants very quickly. We had all the partners sort of chip in to support the work the foundation was doing. And today that work has come upstream as the market has matured. So most recently we’ve been working the foundation has been playing a lead role in getting a parliament passed called the Nigeria Startup Bill, which is an act of parliament that is meant to support the startup ecosystem and protect companies and galvanize a set of incentives for the ecosystem. And so it’s been an incredible journey, really working to build pipeline and create an enabling environment so that we can actually fund companies and the companies can go on to be very successful.

Henry Kaestner: I’d love for you to walk us through some of the stories that you’ve invested in and what is it that they make? I mean, I think about Paystack and Flutterwave. I mean, these are become very, very successful unicorns. I mean, I think in the case of Flutterwave, maybe even $1,000,000,000 valuation, 1,000,000,000 USD valuation. So achieving great scale. Talk to us about some of the companies that you invest in, what they do. And then also, what does it look like in the personal relationships that you have with some of these founders?

Kola Aina: Oh, yes. I mean, I’ll tell the Paystack story. For instance, you know, when I met Shola, the founder of Paystack, I had been dealing with the issue of just not being able to turn on payments on any website or any platforms we built. We will build for customers in my enterprise business. And here was this young guy who said he had built this outlet that you can set up an online payment checkout system in less than 30 minutes. And you could be live, you know, It sounded incredible, right? Because it just seemed impossible to do it locally in Nigeria at the time. And this was just as recent as 2016. It’s incredible, you know, so we invested early today. Paystack supports over 100,000 merchants. And these merchants range from, you know, the college graduate who’s not been able to get a job and decides to start making crafts and selling them online all the way to airlines. That process hundreds of thousands of tickets every month and really proud to say six years after making that investment, Shola is now an investor in our new fund, so it feels like full circle. And you know, when I talk about righteous capital, righteous capital as well can be deployed in the various spheres of society until paystack were sold to Stripe in 2020. And, you know, Shola had a nice exit. We did an exit on that one as well. And now he’s investing in community soccer. He set up a football team in Lagos in Surulere and identifying talent in the community. Surulere is, I guess could be considered mainland Lagos, probably not the best part of Lagos. Right. And, you know, they have players and they’re going to scout this place and help them build their careers internationally. And that, in my mind, is how you build a better country, right, in sports in in the church, in government. And I think that’s only possible when you start to unlock new sources of philanthropic and investment capital, which is why my definition of righteous capital is quite broad, ultimately, is capital that is not tether to legacy to the. Legacy that has cost Nigeria to underperform. And that is really interesting in building a better country and a better future in different sphere of influence. So Shola is a great story, and it’s one that I consider have come full circle. Another great example I like to give is a company called Reliance HMO. It’s one of the fastest growing health insurance providers in Nigeria. They’re digital insurance. We invested in the company in 2017. At the time, you know, they went to Y Combinator and they do a pitch in the telemedicine app. That product really struggled to scale. But I was super impressed with the resilience of the founders. They did the pivots and identified that the traditional insurance companies in the region were run very manual systems, and so they really couldn’t price their products as effectively as they should. Well, if you use technology, you could price the risk a little better. You could serve your customers a lot better. And today, they recently just closed a series B, led by General Atlantic Company, scaling really fast. And I’m super proud of what the founders have built. And so, you know, we’ve backed companies and fintech and Healthtech and Agtech across various verticals. And the majority of the stories of 0 to 1 where we meet the founders at the earliest stages of their development. Before now, we would just write one check and support them in every way we can. You know, as they scale and help them raise full on capital. But in December of last year, we closed on the fund and we’re super excited to be able to be a long term capital partner to these entrepreneurs, to not only invest at the Pre-Seed stage, but to follow on investment at Seed and Series A and hope that we can influence the founders both professionally and personally as well.

Ndidi Nwuneli: I love that and well done. Those are great stories and the righteous capital theme, you know, good money from great sources following good projects that also results in good money coming back into the communities. I just it’s really phenomenal. And, you know, you are building on this issue of how you follow these founders and how you coach and mentor them. How does your faith show up in these relationships? Are you actively discipling young men and women who are looking for meaning and purpose? I don’t know if Shola is a Christian, but I’m just curious with those examples and others, how does your faith show up?

Kola Aina: Great question. I mean, I think, first of all, you know, like minds sometimes flock together. And so, of course, your team, we have members who are, you know, lovers of Christ. And I think over the years, some of my team members, my partner, for instance, has been on the team since 2016. What you see is that our faith sort of shines through our strategy, our policies and our culture. And that for us is probably one of the first pieces. I mean, you see folks sometimes who profess to be Christians and children of God and, you know, you look at their businesses and it’s a contrast. Right. And so we think the way we treat our employees, the way we treat our investees, the way we engage in partnerships itself is a reflection of our faith. Right. And when people interact with us, they should actually wonder, what is it about this guy or this people that’s so different? So that’s one. Secondly, yes, I very much play a mentorship role where lots of the founders entrepreneurship is hard stuff, and so you often find people burning out wondering if they’re doing the right thing, you know? And that often presents a great opportunity to sort of minister to these founders, because there’s no other moment when a founder is open then at that point. And so I guess first off, we want to ensure that how we deal and how we interact reflects God’s grace and God’s love. But then also we take our mentorship responsibility very seriously.

Ndidi Nwuneli: Terrific. And I wanted to push on this issue a bits around, you know, great success stories. Have you had some failures? And how did you deal with those from a place of faith and a place of grace?

Kola Aina: Great point. Really proud to say we have two founders in our portfolio whose companies failed and we back together. And that for me is somewhat reflective of how Christ, you know, we stumble as long as we, you know, we confess our sins and we ask forgiveness. God is gracious and kind to always forgive us. Right. And so in these cases, for instance, it was obvious to us that the founders gave it their all the companies failed, not because they didn’t try enough. I think it speaks to the kind of company that we invest in we are back in people. Right. We’re ultimately trying to make a judgment on the quality of the human being. You know, in some cases, you know, founders have conflict or the time is too early. But we would always back the right founder again and again. And I think we’ve had you know, we’ve had a few cases where companies have just haven’t worked out. Like I said, two cases where we’ve backed the founders again.

Ndidi Nwuneli: That’s phenomenal. I have to say, this is the first time I’m hearing that you back people who fail. Usually we try to run as far away from them as possible. So you are walking reflection of Christ, my brother. Well done. And one last question for me before I pass it back to Henry. You know, as we look at our landscape, it’s a difficult time, right? It’s a difficult time in Nigeria’s history. It’s a difficult time to stay optimistic and excited. We’re losing quite a few strong, talented people being poached all over the world in your sector. What keeps you excited and grounded and how do you keep your founders motivated? Thinking about the future?

Kola Aina: Yeah, that’s a tough one, right? Because particularly today, you know, I’m not sure if this is unscripted, but there’s a power crisis in Nigeria partly connected to what’s happening in Ukraine. And I mean, we had a meeting today and some of my folks are working remote, some are working in the office. And there’s no power. There’s no power, there’s no diesel. It’s really frustrating. Right. And so we decided to buy new power packs and battery packs wherever you want. And so it is tough, you know, but I think starting with our team, you know, everyone on the team is very missional, right? And we’re also very aligned in terms of our faith. You know, I’m not judging anyone, but I think the vast majority of our team members are Christ loving Christians. And so there’s a bigger purpose to the work that we do. And that does help, you know, I mean, kind of it’s reminiscent of the question I like to ask founders, what is your why? Why are you build in this business? In my case, why am I doing venture capital? You know, and it’s a purpose. I believe it’s what God wants me to do, what God has called me to do. And so that’s certainly keeps one going. But I have to say that it’s not all fluff. In the last few years, we have seen incredible successes. You know, our portfolio is up 12 X in aggregate today while multiples on investor capital.

Henry Kaestner: I am an investor and I’m grateful through what God has done through our track record, but it a12x that’s really impressive.

Kola Aina: We’re early stage. We’re early stage, right? So we come into this deals really early as a discovery fund and we’ve been really fortunate with the selection. We’ve recently started to experience liquidity events for some of our early investments and so there is an encouraging tailwind. But I think in terms of stepping out of venture start for my my team and our track record, I think the ecosystem is genuinely excited about some of the exits that have happened as well as the increase in valuations. Right. And so things like ESOPs are really starting to be meaningful when the company issues your stock. Oh, now, it does mean something. A couple of years ago it meant nothing. And so I think there’s a lot to look up to. But yes, the struggle is real for talent. Wages are rising because engineers are sought after all over the world. And so it’s the best of times. It’s also probably one of the most difficult times as well.

Henry Kaestner: Call it. This has been great. I’m grateful for you to be able to paint a picture of what the entrepreneurial ecosystem looks like in Africa and what investments look like. And one of the things we want to be able to do through this program is to change the narrative. In fact, Ndidi has an entire initiative on changing the narrative for Africa, and I can’t think of a better example that’s advance that agenda and that objective than this interview. So thank you very much for that. Thank you for talking about your faith and how that’s informed what you’ve done and what you’re doing. On that note, as we close out, we like to do this across all of our programs that we do have faith driven. Is there something that you’re hearing from God through his word? We believe that God continues to speak to us, and he absolutely does that through prayer and fasting, but very, very much so through his word, through the Bible. And it doesn’t necessarily mean it need to be something this morning, though. It could, of course be, but something recently where you feel like, you know, that’s something in scripture that really just speaks to me where I am and as God just continuing to point me along his path.

Kola Aina: Yeah. Recently I have been meditating on a scripture from Matthew 11. I think it’s Matthew 11 28-30 and it’s a beautiful portion of Scripture that describes the unforced rhythm of grace. And for me, in the world we live in today, which, you know, I’m not sure if we’re still in the pandemic or we are out of it. We’re all zooming from meeting to meeting. Yeah, it’s been. The number of emails I receive has quadrupled. But, you know, we also just closed the fund and are doing a final closed. You know, that scripture says, Are you tired? Are you worn out? Are you burnt out of religion? Come to me. You know, at the feet of Christ’s there is rest, there is grace. And that whole notion of the unforced freedom of grace, I think, is something that we all need to aspire to learn that world where, you know what? Frustrated about what’s happening in Ukraine and I’m frustrated with what’s happening with power in Nigeria and and the regulators. God’s grace is present. Right. And in that we can find rest, we can find calm. And that, for me is super reassuring, just knowing that in Christ it is rest.

Henry Kaestner: Amen. That’s a great encouragement to me. And thank you for sharing that with our audience, and thank you for sharing your time in your life. And may God bless you in the relationships you have with your entrepreneurs and in the community through your foundation. And may you continue to shine that light back in the region where you’re from in the north and through the capital city. And I’m just grateful to have spent time with you. And I know that our audience is as well.

John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman and I am here with my partner in crime, Luke Roush. Luke, how are you doing today?

Luke Roush: I’m doing great and looking forward to this conversation very much.

John Coleman: Well, we’re both looking forward to this conversation because we have an amazing guest, Shundrawn Thomas is with us today. I’ve had the privilege of knowing Shundrawn for several years now. He has an amazing personal story. He grew up in Chicago, wonderful parents that he may talk about, whom I’ve gotten to hear about just an extraordinary guy who’s bought and run different businesses and ended up running Northern Trust Asset Management out of Chicago, one of the biggest asset managers in the world before, and more recently breaking off to start his own firm, an impact investing firm called Copia Investment Group. And so Shundrawn is going to talk to us about that. In addition, he’s published multiple books, one of which I have here today. Shundrawn I tried to find your latest book, Discover Joy in Work, which is excellent. Instead, I found the 2006 version of Ridiculous Faith, which has a very youthful Shundrawn Thomas on the cover. But Shundrawn, we’re so grateful to have you today and to really benefit from your wisdom.

Shundrawn Thomas: John, it’s a pleasure to be here with both you and Luke, and good to see you both again.

John Coleman: Awesome. As we dig into this, you know, a lot of the listeners at Faith Driven Investor are interested in this idea of impact investing and how that ties to faith. Just to set the table. When people say impact investing, what are they talking about in your mind? Or how do you think about impact investing?

Shundrawn Thomas: Yeah, so I’ll start with I mean, just more so in the context of our business and then maybe briefly zoom out. So when you think about it in the context of our business, the business of investment management, when people say impact investment, we’re talking about investing that involves making investments with the intention of generating a positive, albeit also a measurable societal benefit. Now that societal benefit, as you know, can be environmental or it can be social, but you’re intentionally looking to generate this societal benefit alongside obviously delivering financial returns for the business. Now, zooming out, the thing contextually that I like to say is I think this is really important. Every single business makes an impact. That impact can be net positive or it can be net negative, right? And so one of the things to appreciate is that, you know, when we’re in the work of doing business, when we’re operating in the context of things that impact people and society, we’re always causing an impact. And so the real question oftentimes is what’s the nature of the impact that we’re generating?

John Coleman: And Shundrawn, a question for you because you’ve worked in very diverse investment environments. We like to say all investing is impact investing. We totally agree with your thesis that every business, every investment makes an impact, whether positive or negative. How did you come to that belief in your journey within this broader asset management world? Is that something you kind of knew from the beginning? Did you have an evolution to come to that belief? Talk to us about your journey towards that.

Shundrawn Thomas: Yeah, so I think the journey is integrated, but it’s two parts, right? It’s how do I think about my role as a business leader being in the profession, which I have for most of my career of investing. So a business leader in the area of professional investing. Right. And one of the things I would say is it’s an evolution that’s occurred for me over time, John, and it’s how I think about approaching business and leading. I would say, broadly speaking, my philosophy has evolved to where I believe that if you are running an enterprise at its best, there is a triple bottom line that you want to deliver. First and foremost, you want to deliver profit. It’s very fine to say companies have a profit motive, so think of that as income. But second impact, when you think about the fact that when you’re running an enterprise, right. First of all, it’s made up of people. It’s not only the people in your organization, but it’s the partners, the vendors that you work with, the communities that you do business in. And now you have, by virtue of your vision and mission and opportunity to have a positive impact. And it happens by result of either your intentional action or inaction. Now, the third part of that, which it’s complementary, it’s not one the same is inclusion. And one of the things is we work in a multicultural society. We work with people who are created to be wonderfully different. And if we run our businesses in such a way that we value and we respect, we acknowledge and we integrate the value of those differences, we create greater value. And so what I would say is the wonderful thing is it allows us to not only become better at producing profit, it allows us to be better professionals at our craft, but ultimately better people. So I would say that philosophy of just generating in my mind that triple bottom line ultimately informed increasingly how I thought about investing and then ultimately a focus on impact investing.

John Coleman: Yeah, we see that a lot in our work. You know, even just the types of businesses, types of people, there is such a diversity of ways that people can have impact, can create flourishing environments that might look different for an investment manager and a fire truck company or something of that nature. I want to pivot to Copia, and I know Luke wants to jump in with that before we do. Just a quick note. You know, most people associate impact with ESG now. I think ESG become such an omnipresent term for values based investing, at least in the mainstream world. How do you think about the difference or similarities between impact investing and ESG?

Shundrawn Thomas: Right. So I’ll start with this context, John. As you know, I had the great privilege when I led our global asset management business at Northern Trust is really focusing on sustainable investing and socially responsible investing. And if you look, there’s a continuum now there related when you talk about sustainable investing or ESG, you talk about socially responsible investing, you talk about impact investing. But specifically, when you talk about ESG investing in impact, it is important to acknowledge that there are differences, right? Impact investing. As I alluded to earlier, it involves making investments with the specific intent of generating positive and measurable societal benefits alongside those financial returns. And while again, you hear it interchangeable with ESG, one of the reasons it’s notably different is just because the inception. So, like you would know this well, because I know you’re a student of this ESG at its core is really a framework. And actually, if you look at the history, it was really ushered in really in the public sector because they wanted to say, are we considering right the factors of environmental, social or governance concerns? And is that going into the investment decision making? But to be clear, at that inception, that framework was principally about impacting the investment strategy right at its inception, If you think about impact investing, the very intent of it was to integrate into an approach, something that was going to deliver a measurable outcome. So in its inception, impact investing is by definition affirmative. Whereas in many respects, first and foremost, ESG was a framework that was used for measurement and to think about how you incorporated into the risk management. And ultimately it became integrated into various investment strategies. So not bad or good, but those differences are relevant. The last difference I would note, which you would know well, is generally speaking, most of what we see in ESG strategies are applied in the public markets. And interestingly enough, you see more of a prevalence of impact investing in the private markets.

Luke Roush: I’d love to just unpack a bit more. One of the things we talk a lot about with our managers is focus and sort of know what you know and then kind of keep going deeper in spaces that you understand, where you understand kind of what the opportunities are, what the risks are. All that thinking about Copia group and just what you’ve defined is like, All right, this is what we really want to go deeper in love to have you comment on some of the impact metrics, both inputs as well as outputs that you guys are thinking about.

Shundrawn Thomas: I appreciate you asking that Luke. And we are certainly cut from a similar cloth. Like one of my basic rules for myself and personal investing is, look, I don’t invest in anything. I can’t, you know, understand at basic level. But what I would say is this there are a couple of elements to our value proposition are very simple. The first and foremost is we believe in focus. And so to your point on that, Luke, we’ve decided that we want to focus on the lower middle market. When we think about the lower middle market, we’re talking about established companies. Generally, the sweet spot is revenue base from 5 million to 100 million in revenue there. Variety of reasons why we like that. You probably well know that market is increasingly underserved. Banks have pulled away from providing capital there. Many private investors have moved to the higher end of the private markets. And what we find is these companies, we have a true partnering orientation and they very much look for the value add that we want to provide being more than just a financial sponsor. So that’s a part of the focus. The second we talk about is our focus on impact investing. But even there, we’ve decided to focus even more Luke, now. I’m a believer in both the ability to have a positive impact from an environmental and a social standpoint, but we decided we wanted to specifically focus on social impact. And as you well know, if you look at the breadth of impact investing strategies today, they are predominantly focused on the environmental side. So one with impact investing as we know it more formally. It’s one of the few places an investment. Management where the developed world outside of the U.S. is leading the U.S. in terms of dollars invested in focus and the like. And it’s been a prevalence on environmental. And I think, to be frank with you, Luke, I think people look at social sometimes as too hard to solve where it’s the opportunity and sometimes the biggest need. And then the last thing and this is a compliment. We do fundamentally believe in economic inclusion. So again, we think there’s a huge opportunity. If you think about, you know, a simple statistic, like if you look across, you know, private markets, for example, I believe that all told, the amount of capital that is allocated to women and ethnically diverse entrepreneurs falls somewhere below 4% in these cohorts, make up over 70% of the population. So that tells me from a very basic sense, there is a huge mismatch in terms of talent, in energy, in innovation relative to access to capital. So what we say is we want to unlock that so we don’t invest exclusively in firms that are led or owned by women in ethnically diverse people. But we do say we want to target 50% or more of our investments there, because, again, we think there’s a huge opportunity [….] and a huge need.

Luke Roush: And just maybe one follow up, As you first started to wade into that kind of core focus, what were the behaviors as a firm that you adopted and encouraged amongst your team to try to really enable that flow of opportunities coming across your desk? Like what did you do that really triggered that strategy?

Shundrawn Thomas: Yeah, well, Luke, I know you and John can appreciate this from the work that you all do. The first thing that we had to really instill in our culture, and I believe in this, we have to be truly intellectually curious, because what happens is there’s a predominant way in which people invest, Right? And what we’re looking to do is to be different and to be more innovative. Right? It’s no different than how we might think about our role as believers. It says where to be in the world, but not of the world. It talks about when we read scripture, You know, your ways are not my ways. And so literally, there’s a transformation of our thinking that happens when we become believers. And I’m not trying to overstate this, Luke. There has to be a transformation sometimes of your thinking when you’re trying to innovate or you’re trying to approach the marketplace in a new way. So that’s the first thing. The second thing that we drive in our culture is before we can try to compel anybody else of our vision or our value proposition, we first have to believe. And so what I tell people is we’re not just looking for intellectually bright people in our culture. We’re not just looking for people with deep expertise. We are fundamentally seeking to find people that believe in the vision and the mission and the value proposition that we think we’re uniquely called to. And that’s important because it’s a hallmark of the culture. The last thing that I would point out is the way that you reinforce those beliefs is how you organize around a value. And so everybody has maybe differing values, but we think it’s important in a firm to have certain shared values, and those build a load bearing walls. And I think if you look over time, if you really want to have a really, truly great enterprise, culture is only one of the only competitive advantages that you actually have. And so we focus a lot on that Luke.

John Coleman: Shundrawn, I want to dig into something. So you touched on a little bit. Knowing you, you’re a person of deep faith. I think you’re your family are people of faith, and you’re really well grounded in that. You’ve written Christian books. I believe you’re also one of the assistant pastors at your church. If if memory serves. Talk, if you don’t mind, about the way in which your faith has informed your approach to this theme of diversity in particular, and how Christians should think about this and why that’s important to Christians.

Shundrawn Thomas: Yeah. So I love I’m a lover of words. I’m a student of many things and I love the word of God. And, you know, it truly does give us so much practical wisdom that influences if we allow it, every aspect of our lives. But I think including in especially many times how we approach our work. Right. And so, you know, one of the most fundamental and basic things that we know as followers of Christ, he doesn’t make it very complicated. He says, Follow me. Yeah. And that means that there is a blueprint. There is an example that he put forward. And so I’m very much a student of, you know, the life and times of Jesus Christ, right, the way in which he led. And I think it would be impossible for anybody to objectively look at the leadership of example of Christ and say anything short of that. He for sure was the most inclusive leader that you would ever see. Think about how he approached those not only in his immediate circle that were different from different backgrounds, from different ethnic or racial or however we want to characterize it. Right. And what’s always amazed me, if you really just with open eyes, look at it. Not only was he inclusive, he extended himself. He encouraged his followers not to just go with the status quo, to always think about the least of those. Right. And he had this amazing quality to see the unique value in every person. He unlike us in our fallen state, we see differences as ways to divide. But he saw things that were different as attributable value that could be brought into the whole to make the whole greater. And so to me, it’s just literally following that example. And I can tell you unequivocally, John, you know, when I joined our leadership team at Northern Trust, it happened to be the case. When I joined, we had 16 executives on the asset management leadership team. I was the only person of color and we had no women. I’m using that as one example. There are lots of characteristics of diversity. When I left, the team that I left was two thirds women in ethnically diverse. I can tell you without a hesitation that that wonderfully talented and diverse team that I work with over time that we got there on purpose, not an accident made me a better professional and a better person. So it’s not just something intellectually I know in my head. I know through my experience what the value of that is. I can also tell you, John, we had incredible success in the business in terms of increasing our innovation, our product development, our revenue growth. And so it tells me more than just something that’s a nice to do, that’s a philosophical good that there is real value in it.

John Coleman: Yeah, I mean, that’s such a good word. Shundrawn. And it is, you know, we’re watching just like everyone else. I feel like the Chosen right now and it helps bring to light you know this you get to picture actually the way that Jesus behaved in the people. I mean, it really is. It’s amazing just how open and inclusive he was of the least of these of the outcasts of those who had been pushed to the margins and how much he was ready to challenge existing power structures and things like that. And he did you know, he saw that in a way, we are all created with dignity. And it’s also practically just really reassuring to me that that example, to your point, can help us unify, not divide that in this understanding that each person has immense worth and dignity in God, that we’re all created equal and that we have an equal worth to God. If you truly believe that it’s impossible to devalue someone or to not want to appreciate them for who they are and when done well, obviously it hasn’t been done well at all points in history for Christians. But when done well, that’s such a and the way that Jesus did it, that’s such a liberating message.

Shundrawn Thomas: It is

Luke Roush: And maybe we go over to just how you think, talk about one KPI in terms of percent or more of capital put to work. Maybe just talk a little bit more on kind of intermediate KPIs right there, sort of this ultimate where does capital go? Yeah, as you think about deal flows, you think about team composition as you think about hiring and being able to source an appropriate candidate pool that maybe looks and thinks differently right, than the existing team. How do you think about what are the, you know, your current team and what do you have them focused on in terms of performance indicators for 2023 as the example?

Shundrawn Thomas: Yeah. So let me split that in two categories. I’ll start with how do we think about it from the fund standpoint? So we have those five themes diversity, equity, inclusion, equal opportunities, health and wellness, workforce development and quality education. The way that we think about it is like if you look at something like workforce development. And so we’re very much focused on the ability of companies to not only create gainful opportunities for work, but investing in the growth and development of those professionals. And so whether we look at metrics like job creation and certain value added roles, we can look at actually in a company from the time we invest how people’s income grows or tracks over time, how we’re moving people into more sustainable jobs. So the same sustainability of their employee, all of these things we can see in terms of dollars spent, that’s a particular KPI in terms of direct to the investment of the development of employees and their skills. So just in the area of just workforce development, there’s this rich set of things that you can look at in terms of KPIs and you can measure them on an absolute basis for that particular enterprise. And you can also measure it across, say, similar enterprises. The thing that we do from this is very important. Luke, we seek to be practical. So we don’t expect that a single company touches every theme. We say, where is the place, given their unique mission or of calling? They are making a meaningful difference. And then what we do is, you know, some people are just I say we got lots of critics in the world. We’re not coming alongside as a critic. We’re saying it looks like you have a great opportunity here. It’s important to you. Let us help you do that even more. And that’s how we’re adding value now within the company. What we say is we have to hold ourselves to the same standards. And so in the same way that we’re going to be delivering impact investment reports as part of our report, we’ll talk about things that we’re doing at our company. So whether it’s everything from the diversity of our or to our leadership team, whether it’s the investment that we make in our employees. Like, if we’re going to expect this at companies we invest in, we have to hold ourselves accountable for it. And one of the basic ways you hold yourself accountable for Luke is you’re transparent. And so you let people know what you’re doing along those lines.

Luke Roush: That’s good. That’s good word. I think the transparency is a really that’s a word that’s come up like three times in the last week. And, you know, when you shine a light on things, you build trust and you build credibility and you just build. I think there’s a with whether it’s with your limited partners, whether it’s with portfolio companies, CEOs, whether it’s with teammates, creating more visibility helps to establish a foundation for trust. And so I think it’s an important point. Yeah.

John Coleman: Can I ask you, Shundrawn, on, you know, a key topic here, obviously is in certain types of impact investing. There’s a belief that it’s going to be concessionary or there’s a stated fact that it’s going to be concessionary. A lot of the impact you’re talking about is going to be delivering both financial return as well as social impact. How do you see the interplay of those two things and are they mutually reinforcing or are you approaching them as a tradeoff?.

Shundrawn Thomas: Yeah, so for us, so I want to be clear on this one. I think that we need a range of different types of impact investing. I think you can have impact investing that is done more specifically, I would say, in the philanthropic space or by social enterprises, and that takes on a certain character. I think there are organizations that I think are wonderful organizations like, you know, lists that works to get capital to underserved communities. And I would say some of what they do, by its very definition, is concessionary. And we absolutely have a need or a role for that, particularly when you have a partnership between public and private enterprise, in my opinion. And then there’s an example of the work that we do. Our premise is that you can also invest in a way that drives impact that is not concessionary. Now, when I say that is not to say that I think there’s anything wrong with concessionary investments, it’s just that I’m saying that’s not what we’re doing in this context. And I think you need that as well, because you’re going to have instances where people will say, Look, from the perspective of my fiduciary responsibility, I need to have as a basis that I am delivering investments that are going to have competitive market returns. And as a starting point, we won’t say that there’s anything inherently bad with that. Right. But I think there are folks like us, certainly. I think I look at the work that you all do, John, where we can say you can do that and still drive impact. You can do that and still have values based leadership. You can do that and still have impact for the kingdom. So the premise that these things are by definition antithetical, That is the premise. I think that we also have to be able to attack.

John Coleman: Shundrawn that is such a good articulation as we dive even deeper into this kind of measurement in the way that you look at impact, you look at financial return in that spectrum. One of the things I know that you all have done is partnered with Sustainalytics on ways objectively measure as you think about that partnership. Just help us understand that and how that reinforces the work that you’re doing.

Shundrawn Thomas: Yeah, I appreciate you asking that question. So Sustainalytics, which is now owned by Morningstar. So Morningstar Sustainalytics is a global leader in sustainable research, and so they work with many types of enterprises to focus on this area of measurement. So there were two important reasons there, others that we really wanted to partner with. Sustainalytics. First of all, when you’re trying to innovate, you want to work with people who can bring value, add and perspective that is complementary and different to yours, to the table to drive the best. So when we were working on this proprietary framework, we said, Listen, who could we partner with to really help drive innovation in this area? The second thing I think it ties to something that Luke and I were discussing earlier. I think there is value to having someone your partner with that brings an independent lens to what you’re doing. So there are three things that Sustainalytics does as it pertains to our framework. First of all, they provide a wholly independent assessment of our framework so that you actually as an investor can know that this is a genuine and a well inform impact investment framework. The second thing that they’ll be doing as part of the framework, John, is they’ll provide an independent assessment of each individual deal that we do. And the third thing that they will do is they will work with us on both the pulling together of the reporting of those KPIs or metrics they look was referring to, and then packaging that in the impact report. And so I think that creates not only a partner, but I think something that’s really important, a sense of accountability to what we’re doing and what we’re committed to.

Luke Roush: So that’s actually fascinating. I’ve got a whole bunch of other questions around Sustainalytics that we can maybe follow up on another time, because it sounds like a really powerful tool that is relevant in the midst of a fair amount of criticism sometimes around, you know, particularly public company funds that are being greenwash, so to speak, rather than real commitment to environmental stewardship. This idea of inviting other partners in to kind of help to create visibility and accountability. I think it makes a ton of sense. Thank you for your comments on that. One thing I want to talk about, just switching gears before we go to the Lightning Round is how your role as a pastor in your church is equipping you to take action on a different mission field, which is really more tied to your day to day work as an investor? Love to have you just talk about the Venn diagram between those two parts of how God equipped you.

Shundrawn Thomas: So, you know, it’s interesting, you know, over time, you know, as I grew in my level of responsibility in the workplace and I went into, you know, senior and then executive management. I mean, nobody gives you the memo beforehand about how much time that you will spend on the people side and how fast. So you need to be in that. Now, one of the things sometimes you don’t see it where sometimes God is preparing you in certain ways that you under appreciate. I’ve always served in the church, got involved as a teaching pastor, and then as ultimately associate pastor. And you deal with life on life issues with people. And the starting point to do anything that you do as a pastor has to be that you care intimately and deeply about the people. And that’s important because if we’re really honest in the workplace, that is not generally the starting point. The starting point is the self-interest of the organization or the profit motive and those things. And so I find that that experience as a pastor helps reorient me to what is the most important thing many times, which is the nature of that relationship. Because a lot of what you’re doing when you’re trying to do things in a professional setting is only going to come by the effort, the innovation, the hard work, the commitment, the belief of people. And so you have to appreciate then a big part of your job is actually to sow into the people. A big part of your job is to help them flourish. And so if your professional life is not different than your personal life, if you just have one life, if what you do whenever you interact with people is have a focus that says I actually want them to flourish, I think it’s incredible in terms of enhancing your effectiveness as a leader.

John Coleman: Amen. Fantastic. I mean, I can’t echo that enough Shundrawn. And that’s what we see in the best business leaders that we’re fortunate to partner with is just this real love of and belief in people. Right. Which I do think is founded in faith. Everybody’s created by the same creator. Everybody’s got talent. I’ve got a friend who says talent is universal, opportunity is not right. And in workplaces that create that I think are important. Now, I am an occasional writer. It would be absolute professional malpractice of me if I didn’t let you talk about a book. Shundrawn, I know you’ve written many books. I would love to hear about your journey as a writer, although I’m probably nerding out more over that than anything else. But your latest book, I believe, is Discover Joy in Work. Talk to us about Discover Joy in Work. How can we discover joy in work? And why is that topic important to you?

Shundrawn Thomas: So, you know, it frankly ties a lot to lose questions. So one is both about personal experience and it’s about my experience and leading people. So two things very quickly. One, I found that I, over time got to work with these incredibly talented people. And when you got to build real relationship with them, I was literally shocked at how many people were so deeply unhappy in their jobs. And I’m not exaggerating the fact that I’m [….] state truly the majority of people. The second thing that really put a light on this is for me personally, I went through a period where I was just struggling with a deep despondency from the outside looking in. It was at a period of time where I was seeing this incredible quote unquote success professionally. And so between being someone who had a sense, for lack of better terms, look at the past of people in the workplace. In dealing with my own experience, I really had to step back and think about, like the experience of work. And what I realized is, again, there is a joy I believe that God wants us to experience at work. I mean, if we have more time. I talk about the very opening passages of the Bible and we find a God not at rest, but at work. And if you were to describe his attitude towards his work, I would say, how could you describe in any way but joyful? And so how do we experience that same thing? I think it’s three things that are simple, not necessarily easy. All of them involve changing our perspective. The first is changing our perspective to the workplace. I think many of us have the wrong perspective about the workplace, and by that I mean the people that we work with in the environment we work in. The second thing is about work ethic, and that comes down to realizing that there external motivators that principally drive us from work. But if you’re external motivators, money, recognition and respect, I call it three R’s. It’s remuneration, you know, respect. In recognition. If your desire for those is greater than your internal motivation, you have imbalances, not the right work ethic. So you have to change your perspective on work ethic. The last thing is really important. We’ve kind of been talking around this. I call it work life. I say it simply this way, John, we focus so much on our careers, but the reality is your work life has to fit in the context of your overall life. There’s a purpose for which we are called. That’s bigger than any job, any role, any paycheck we have. And when we can see that we don’t have a occupation, we have a vocation, we have a life’s calling.

John Coleman: Well, I’ll give a brief testimony to discover Joy in Work, which everyone on this podcast should buy. I’m pretty sure we can’t pitch securities on this podcast, but I think we can pitch books. You know, I did my own transition a couple of years ago when I joined Sovereigns and was writing a book called The HPR Guide to Crafting Your Purpose. And that was part of me switching to the type of firm I was in. And I actually got to interview Shundrawn for that book, and that turned me on to his writing. And one of the books I read through my own transition was Discover Joy in work in the frameworks that you laid out I thought were so thoughtful about crafting a life that was really aligned with your work and about the way in which you could orient yourself towards work. And that was super informative for me as I began my journey at Sovereigns. Luke still thinks my work ethic is a little bit not what it should be, but it’s improved at the very least. And I thought the book was just fantastic. So I do hope people will pick it up. It’s an important topic. Luke Maybe I’ll pitch it over to you.

Luke Roush: Yeah, I’d love to. Transition is recognizing that we’re short on time. One of my favorite parts of this podcast is we affectionately call the Lightning Round. And so I’m going to lead off and then we kind of go back ping pong, back and forth. Some of the questions are serious, some of them are less so. But the idea is that we just get kind of 30-60 seconds responses. And so we’re grateful for you playing the game with us. I’m going to start off Chicago native Shundrawn and we’re very, very curious about which is better. The Italian B sandwich or deep dish pizza?

Shundrawn Thomas: Yeah, well, I love them both. I have to go deep dish pizza. I have to go with deep dish pizza.

Luke Roush: Yeah.

John Coleman: All right. Shundrawn I’m pivot here a little bit. Chicago is known for its great sports teams that are maybe have a spotty performance track record, let’s say, other than the Chicago Bulls of the Chicago sports teams right now between the Cubs, the White Sox, the Bulls, the Bears, who are you most optimistic about winning a title over the next couple of years?

Shundrawn Thomas: Oh, my gosh. This is a tough one because I am a die hard and miserable Chicago sports fan. I think all of our major teams are really bad straits right now. So let me just tell you where my heart is because I’m a Cubs fan. Even though I grew up on the South Side, I am a Blackhawks and a Bulls fan, I’m going to go Bears, not because I think we’re anywhere close to sniffing a Super Bowl. It’s just that I’m such a Bears fan and hope springs eternal.

John Coleman: I love the optimism.

Luke Roush: Lot of history, Buddy Rich history there, coming back to discovering joy at work. I think a lot of people here discovering joy at work and they think about an operating company, But you’re an investor, so how would you encourage investors to better discover joy in their work?

Shundrawn Thomas: I think that’s a great question because I think one of the basic things I would encourage investors, one of the things that we can do is we can get so focused on the intellectual asset of the discipline of investing. We are all head and no heart. So my basic encouragement to investors is bring your heart alongside your head. There is nothing that is going to depreciate your ability as a great investor. If you also look for the things that you are passionate about and are meaningful for you. And I think taken together that will bring a level of joy in your work that maybe some have an experience here heretofore, because we all need that connection between your head and heart.

John Coleman: Shundrawn I think your dad is a pastor and not just a pastor, but perhaps your pastor.

Shundrawn Thomas: Yes.

John Coleman: What is the best piece of pastoral advice you’ve gotten about your career?

Shundrawn Thomas: Oh my gosh. You know, my father and my mother who founded our church, they’ve given so much great advice over the years. But I would say the piece of advice he gave me that it’s been so beneficial to me at work and at home is that he says, Look, son, you know, wherever you are, be there. And if you don’t pay attention, the depth of that can just get by you. But I think that what happens for so many of us, we live so much of our lives distracted. And some of the most important moments that we have are the engagement that we have with people. And I’ll tell to myself, you can look back over time and you can say, you know, I was there, but I wasn’t really there. I wasn’t locked in. I wasn’t focused on that. And I missed that special moment. And so I always hear his voice echoing in my mind, and it gives me a different level of engagement and focus, particularly with people. Wherever you are, be there.

Luke Roush: So I want to actually go outside of your work and outside of the church, maybe just another ministry or nonprofit that you’re personally excited about. You find joy through your engagement with them.

Shundrawn Thomas: Yeah, so I appreciate that question. Now, we’re very involved with a number of different nonprofits, and my wife and I are very charitably inclined. I would say one that is top of mind that’s doing some interesting work, particularly it impacts communities here in Chicago, but I think it’s an example for the nation. So I joined the board of Rush University Medical Center, and the thing that pulled me over the top because we’re very intentional about where we spend our time, is they do this innovative and groundbreaking work on health equity. I mean, it is truly an example for these. I mean, they focus on communities in particular on the west side of the city. These happen to be communities that are predominantly African-American and Hispanic, but predominantly African-American. A lot of these communities, when you see what happened over time, you have a lot of industry moving out of the city and so forth and so on. But your reality is what was left is communities where they are, among other things, not only banking and financial deserts, but health deserts. So providing expert health care, creating access. But then the last thing is they went even further. They start thinking about ways to engage the economic vitality of these communities. So they said, as a hospital, we’re not only giving care to people, but we are a business. So we can do business with and engage people in the community is such an innovative way to think about health equity in the fact they’re doing it out in the community. And so we’ve come alongside that. We give a lot to those particular initiatives and we serve in that capacity.

John Coleman: That is awesome Shundrawn. So one thing we love to know end on for every episode, given it’s the Faith Driven Investor podcast, is for our guests to just teach us one thing that they’re learning through Scripture right now that’s impacting your life. I know this is important to you, but what would you share with our audience about what you’re learning from Scripture right now?

Shundrawn Thomas: So it is going to be very timely and topical because one of the privileges I have of serving in our church is I said as an associate pastor, I serve as teaching pastor, a teaching pastor. And so what I always say whenever I have the privilege to teach, to deliver the homily or the sermon, it’s always impart things that God is working with me on, revealing to me, and I feel like there’s an importation you have to share. And so one of the things I’ve been focused on most recently, and I’m actually teaching a series of the church on it’s a three part series is focusing on the practical wisdom and the power of the Word of God. I think it’s so easy in times like this, you know, people’s hearts in some ways are failing them. Their confidence in political and governmental and business systems is shaken. We look at all the things going on in the world. And so where do we go to answers. But we have this incredible source, the word of God. And what I encourage in this service, in this series is understanding one, The word of God is active, right? It is continually working. It’s effective. It does exactly what it is intended to do. It’s time tested, it’s enduring. Right. And so there’s a source of this deep practical wisdom that we have that we can trust. And I think for me, that is such an encouragement, like all the things that are going around, to just refocus on that truth. And so that’s what’s been top of mind for me.

John Coleman: Shundrawn awesome look. We are grateful for you taking the time on the Faith Driven Investor podcast. We’re grateful for the witness that you are in the financial services world and your faith and how that’s reflecting on others and also for the great work that you’re doing in the community right now. And, and I think Luke and I would both agree that we’ve loved the conversation and we’re very hopeful about the work that you’re set out to do now and really appreciative that you’re sharing your story with the world. Thanks so much for joining us.

Henry Kaestner: Welcome back to the Faith Driven Investor podcast. I’m here as always, or most of the time, at least with Luke. Luke. Good morning. How’s Nashville?

Luke Roush: Nashville’s beautiful, beautiful spring morning. Tulips are coming out.

Henry Kaestner: That’s awesome. We’re taking the show on the road today. We’re going to the amazing, amazing, amazing country of Israel. And it pains me that I’ve only been there once. Most of our listeners probably will have been there if you haven’t. It’s just amazing. It’s great culture. The weather’s great, the food is awesome, scenery really great. And then to walk in the footsteps of all of our biblical heroes is just it’s amazing. It’s otherworldly, almost literally. And our program today is taking us to Israel, to Michael Eisenberg, who is a crazy, successful investor coming out benchmark time on the Midas list, made lots and lots of great investments over the years. Maybe the most impressive thing that he’s done is the fact that he has written a blog called Six Kids and a full time Job, even though he has eight kids. So now under selling, under promising overdelivering. And I think that’s what he does as an investor as well.

Luke Roush: He’s got to make it more approachable. You know, eight is just completely unattainable for most individuals. Six makes it at least kind of within spitting distance.

Henry Kaestner: That’s right. You know, if it’s eight, then they think it’s a work of fiction. Six kids will bring people in. And then, you know, with time, he says, yes, eight. Michael, you do have eight kids, correct?

Michael Eisenberg: I do have eight kids, yeah. In fact, when our eighth was born and, you know, and the blog didn’t have a scalable name, one of my partners from Benchmark wrote Maybe you should rename it. Eight is enough. Those people are old enough to get the idea. Yeah.

Henry Kaestner: I’m a child of the seventies. That was a great show. I remember that.

Michael Eisenberg: Me too.

Henry Kaestner: Very cool. So, Michael, thank you for joining the program.

Michael Eisenberg: Thank you so much for having me. Henry, Luke, appreciate it.

Henry Kaestner: So give us we’d like to do this with all of our guests, of course, but give us an autobiographical flyover. You haven’t spent your entire life in Israel, but you’re doing some incredible things there and do the autobiographical flyover. As we’re doing this, I’ll just tell our listeners why Luke and I are so fired up about having you on the program. We’re talking about a guy who serves on the board of an organization in Israel called Yeshivat Har Etzion. It’s a Bible study. He’s fascinated by the Word of God and what it means for his life, but what it means also for his professional life. And the fact that we’ve gone this far along and Faith Driven Investor and having connected with Michael through our great friend Evan Baer a long time ago, I’m embarrassed that it’s taken this long. But we’re going to learn from Michael about what he’s heard from God and how it informs his investing. Before we do that, give us a fly over who is Michael?

Michael Eisenberg: Yes. As you hear from my accent I am not originally from Israel, I was born and bred and raised in New York. I’m fond of saying on the island of Manhattan, I was born in Manhattan. I went to elementary and high school and college in Manhattan, but I took a detour after my first year of college, and I went to study at that same Yeshivat Har Etzion when I was 18 years old, after my freshman year of college and one year turned into two years of Bible and Talmud study in those amazing halls and under the tutelage of the two heads of the Yeshivat, this house of Torah and Scripture study and I had a transformative experience right about this time here today may actually even be the anniversary of when it happened, because it happened a week after the Jewish holiday of Purim, which fell last week. And it was the year of the first Gulf War in 1991. And the war ended on Purim Day. And Scud missiles had rained down for like two months in Israel. And I found myself in a room with the head of the Yeshivat, a rabbi who was a Holocaust survivor. And I asked him a following religious question. And your listeners will appreciate this, because as religious people, we want to follow the laws, the religious laws. And so I asked him if he thought there was a greater religious fulfillment of commandments, if I moved to Israel and settled in an unpopulated place, the Negev, the Galilee, or if I settled in a very populated place like Jerusalem or Tel Aviv or city, would it be the same fulfillment of the biblical commandment to move to Israel? Now, mind you, I had no intention of moving to Israel at this point in time. And the Rabbi answered me. He said, Your question is nonsense. It’s total nonsense in a very charming way. He said it. He said, What you really need to do is move to Israel and open a factory to employ 10,000 people who will earn an honest and decent living. And I’ve been going to kind of orthodox Jewish religious education my entire life. And never once I heard a rabbi talk about the economy or business and not just as a spiritual imperative, but as a religious imperative and a business imperative, and that it’s good business to empower other people to earn an honest and decent living and thereby grow the pie. And so at that moment, I decide to move to Israel and try to employ 10,000 people. And I came back to the States, finished college in two years. I graduated college on May 31st, 1993. I got married on June 13th and moved to Israel on August 11th in pursuit of trying to employ 10,000 people, […] and decent living. And that’s what I’ve been trying to do ever since. That’s been like my life goal to keep doing that.

Henry Kaestner: So tell us how you got involved in investing. Did you have an operating background first when you first moved to Israel or did you right into the world of investing?

Michael Eisenberg: I got bad news for your listeners. I don’t have a background in much of anything. You’ll be disappointed to find out that I have a degree in political science, which I think I got good grades, but I don’t remember going to class that much.

Henry Kaestner: That’s right. I do too, and Luke is public policy guy.

Michael Eisenberg: Maybe there’s something there right, maybe there’s something there. And so the kind of background is I actually got started in political consulting. That’s where I got started. And political consulting, I discovered, didn’t create that many jobs due to politics, for what it’s worth. But, you know, to be perfectly honest, I was fired. No one told me I was fired, but I was and I was unemployed in my twenties with one child. And I couldn’t find a job here in Israel. And I was an immigrant and I started something that became a tech merchant bank. I didn’t know anything about tech or banking, for what it’s worth. So it was like classic imposter syndrome. But I was driven. I had to create jobs. That’s like that’s what I had to do. And so that’s what I did. And we started as merchant bank in the first bubble came. The bubble came in the late nineties and we all looked like geniuses, you know, that’s how I started my career. And then I got recruited by a bunch of venture funds and ended up going to one and ended up at Benchmark and then started my own together with my partners. And so, you know, that’s my story. I still don’t know anything about technology, by the way, and I struggle to read a balance sheet and an income statement, but it’s been okay. That’s the truth, by the way. That’s not like some false humility that is the truth.

Henry Kaestner: So you sound a lot like me, except you’ve got twice as many kids. But on the income statement and the balance sheet side. But Luke does know how to read balance sheets and income statement. So I surround myself by a lot of smart people. I know. And my presumption is you’ve done the same.

Michael Eisenberg: That is the secret to success. And by the way, it’s the secret to a happy marriage. Married people who are better than you and you’ll do much better. And they all like a mirror up to you all the time and challenge you and keep you humble and make sure you’re doing the right thing and you aspire to other men. Same thing is true in partnership. I’ve been in partnerships my entire life. My partners are all way smarter and more capable than me. They’ve proven that.

Luke Roush: So how have you seen just kind of the entrepreneurial environment and experience change in Israel over the last number of years? What’s most different today than it was when you got started?

Michael Eisenberg: That’s a great question. And we started by selling our good companies young because it was a young ecosystem. You know, we forget Silicon Valley is like 60 years old. And so it’s had enough time to kind of germinate management teams and financial sophistication and growth capital and all those things. We just were only around for 25 years, and so that 25 years feels like a long time, but it isn’t. And so now we’re building full stack companies and that’s a massive change. We said when we started all of my current fund that what we really want to do is build $10 billion companies out of Israel and they should have an Israeli flag in the front of the building. And that wasn’t obvious when I got started that you could even do that.

Henry Kaestner: I remember coming up to Haifa maybe about ten years ago and just being incredibly impressed. I well, it felt like Silicon Valley. It felt like every single major technology, you know, as Apple, as Google, Facebook, everything as you’re going up. And I remember back when I was on Wall Street, I remember a checkpoint being a big Israeli company, but it is out of nothing in 25 years. It’s incredible. Taught us a little bit for those who don’t understand what we’re talking about and haven’t heard about what has happened in Israel. Give us a sense of the size and the scope and just the depth of what’s coming out of Israel maybe. And it started out of the Israeli defense industry, correct? First.

Michael Eisenberg: Yeah. And even still, you know, in most American places, we have a technology center. What you have is a great university, Stanford, MIT, whatever it is, it produces technology people. Most of Israeli technology economy comes out of the military here, […] 200. Another one starts with 81 and some others. And so you build an esprit de corps in these places and mutual responsibility, and then they go out as teams and start these companies. They tend to have kind of less business exposure than your average American college graduate. But, you know, it’s a different kind of ecosystem in that way, by the way, it’s a far more loyal ecosystem in that way. People stay companies a lot longer.

Henry Kaestner: Got you.

Michael Eisenberg: Out here.

Henry Kaestner: Okay. So I want to get right into the meat of what we want to talk about with you, because you’ve written extensively on what the Bible says about investing. You’ve written about what the Bible says about a lot of things. So you’ve got two really interesting books. One want to touch on The Vanishing Jew, because that’s fascinating. And the other one, of course, that really brings us to today is the tree of Life and Prosperity. Before we get into each of those, give us an overview of your journey and learning from God’s Word. Since you first met the rabbi who encouraged you to look at the marketplace, how would you summarize what the Torah says about business and investing and what guide you through that?

Michael Eisenberg: So the most important insight is do we think that scripture is some sort of parable, or do we think it’s a blueprint for how you live a life in an ethical nation and ethical and moral life in service of something greater than yourself? And that’s a critical part of the way I approach the Torah scriptures, which is these are real things. In fact, when I launched my first book on Genesis in Hebrew, I did like an evening with a rabbi named Rabbi Loud, and someone asked him, What did you learn from reading Michael’s book? And he said, I learned that people haven’t changed in three and 4000 years. People are people. Families are families. Issues are issues. Wealth is wealth. And morals and ethics, you know, are relevant today like they were then. And so I thought that was just a great encapsulation. And so if you think this is a blueprint, Genesis, Exodus, Leviticus, as the case may be and on you look for how to apply it. And what we’ve lost I think is a way to interpret it to our modern society. Somehow we think when we read about, you know, Abraham and his flocks or Isaac and his flocks and his agricultural enterprise, so we say, Oh, that was then. But now we’re like in technology and computers and manufacturing. But I think that’s interpretable, not only interpretable in a way of parables, but fundamentally interpretable. It’s not an accident that Abraham was a shepherd and Isaac had an agricultural empire, and Jacob goes back to being a shepherd and Joseph becomes the secretary of the Treasury of Egypt. These are evolutionary behaviors that we see in family, generational businesses and in other areas like that. And so I think it’s a blueprint.

Henry Kaestner: One of the things that we’ve looked at a bunch, both were Faith Driven Entrepreneur Faith Driven Investor is the creation mandate and this kind of call to create be fruitful, multiply, take dominion over all things. And I’m curious, as you’ve looked into this with a number of rabbis and these yeshivats, etc., about some of the passages that you grasp on. And I’m wondering if they’re the same. Presumably many of them are. But in terms of the emphasis, you know, like, you know, you go back and say, see, God has told us to be able to be out in the marketplace in the Christian worldview. Of course, a lot of times we’ll go to the Book of Acts and talk about the fact that 39 of the 40 miracles in acts took place in the marketplace. What is it in Israel and the Jewish tradition? What is it you look back to specifically? I mean, you may mention some of that that what Abraham and Isaac did and Joseph being in the Treasury, etc.. But do you see anything, for instance, in the Genesis story, the Exodus story, or they’re kind of these rallying points that you say, see, this is why we need to do this, etc..

Michael Eisenberg: By the way, parallel to some of the Christian teachings. So we have rabbinic literature from similar time periods. And in fact, there’s a lot in rabbinic literature that takes place in the marketplace as well. And I don’t think that’s an accident because those are the same time periods. Right. Marketplaces evolved primarily after the Romans came into our part of town here in Israel in the call it first century B.C.. Right. So we have those parallels also. My focus in the books, although I do bring from some of the rabbinic literature, is really what Christian listeners would call the Old Testament. We call the Hebrew Bible. And so in the creation mandate, there’s a few parts of this. One is everybody works and everybody creates. If you read through the Book of Genesis, you can’t not notice that Noah invents the plow. I’ll come back to Adam in a second, but Noah invented the plow. Abraham is a wealthy man. The word wealth or possessions is what’s called a […] In German, which is a leading word in all the stories about Abraham and Isaac creates an agricultural enterprise, and Jacob and Esau fight over inheritance. Basically. Why they’re fighting over inheritance because there’s what to inherit and there’s different views of what that businesses and, you know, Jacob and his sons are in a family business and they’re fighting over that. Right. They go to shepherd the flocks farther away. And the whole story of the economy of Egypt is told at the end of Genesis. And I think a lot of this goes back to the beginning of Genesis. And there’s different interpretations, both in Hebrew commentaries and in Christian commentaries, to the best of my knowledge of the story of the Garden of Eden. And, you know, man is told, go forth, be fruitful and multiply. And to exercise dominion over the land, I would take a jump for them to the Middle Ages for a second. […] the great scholar of the Middle Ages and Jewish philosopher, doctor and scholar of Middle Ages has this line that he brings from the Book of Psalms, where he says, that man is just a little bit less than God. In Hebrew, it’s about [….] and he’s a little more limited than God. That’s a very aspirational comment. It says that, like, God created the world. We need to continue creation. And in fact, one of my arguments in the book is that in the Garden of Eden, man created nothing because he was fed everything kind of equated to universal basic income today. We got all your basic needs taken care of you’ll be indolent. And Adam in the Garden of Eden was indolent. And so he sinned, by the way, he never talked to his wife in the Garden of Eden? We only find her talking to the serpent. She had no conversations with Adam in the Garden of Eden. Because when we’re not productive. We get bored and we sin, we get bored and we don’t do the right thing and we create nothing in God’s world. And so man is expelled from the Garden of Eden. And for the first time he creates something which is a person. And if you read the Scripture carefully, only once man is expelled from the Garden of Eden does he have children, which is the ultimate creative act at the end of the day, the ultimate most godlike act. At the end of the day, in Talmudic studies, we talk about that there are three partners in the creation of a child, man, wife and God. Right. And so it’s the ultimate kind of joint creative act. And then man begins to work for a living. Now we view it as a curse, right? That the thorns and thistles come forth and by the sweat of his brow, managed to till the earth and create his bread. At the same time he creates something and that begins the creativity of humanity.

Luke Roush: So I will do just on that called to create, which is the title of the book that we’ll read here in the US that speaks to kind of why do we create? There’s a great podcast that Henry and I oftentimes point entrepreneurs to and our own teammates too. That’s done by Simon Sinek on Start With Your Why and just curious to kind of get your take on why do we exist? We exist to love God and love our neighbor. How does that manifest in and through the way we invest, the way we build products and services, etc? I’m curious to just have you unpack that in terms of actually, let’s make it personal. Why do you do what you do Michael?

Michael Eisenberg: I go back to being super motivated by creating 10,000 jobs, and I want to explain this for a second. It’s not just creating jobs. The economy grows and enables other people to flourish when we don’t think of it as a zero sum game. And I think the biblical view of the economy is I can be successful and I should make you successful as well. That’s good for me and good for you. And so why do I do what I do? Because I think a more prosperous society, economically prosperous society, creates better families, creates better marriages, creates better belief system, the more cohesive communities, and enables people to get through tough times. It builds resilience in society. And there’s a level above that, which is I see something a little radical right now, so I hope you’ll excuse me. You know, there’s a lot of people talking about capitalism being broken today and that there’s a problem with capitalism. I think it’s a little different. I think if we look at capitalism, we’ll say that it’s created more prosperity, more progress, more greatness for humanity than any other economic system before. But when Adam Smith talked about the invisible hand of the market, he lived at a time and lived in existence that was predicated on a religious community and society that existed where he was. So a lot of the mutual responsibility and mutual empowerment was an understood prerequisite for Adam Smith capitalism. What’s happened over time is that the capitalism has gone awry, but that the underlying religious assumptions of community responsibility, of empowering the other, of loving thy neighbor as thyself, of saying I’m going to succeed and ensure that he succeeds because he’s part of my community and part of my faith. And we have aspired goals and a common code and a common language that has been undermined in large parts of modern society, where people have adopted relativist ethics and morals and they’ve developed a significant amount of individuality and individualism, all of which is important. But it must it must live alongside the imperative to empower others and create on behalf of yourself and on behalf of others. And that underlying assumption that Adam Smith built capitalism on is what has disappeared in many parts of society and is what I hope we can reinstate this covenant among communities of men built on often religious faith, most often religious faith that brought these communities together where people eye to eye. If you go to synagogue every Sabbath or church every Sunday, you see people there on our sight and you know, they’re part of your community and you can empower them. And on that you can build a very successful and empowering and mutually empowering capitalist society. When that erodes, it gets tougher.

Luke Roush: So your point really is that it’s not that the animal is no longer functional or somehow evil, it’s just you plop that animal into a completely different operating context. And the environment now is actually not conducive to flourishing in the way it once was, in part because of, you know, the anonymouszation of community. People no longer actually recognize who is my neighbor. Is that kind of what you’re getting at or no.

Michael Eisenberg: I think it’s more than that. It’s not. They just don’t recognize who it is. We had a common code. There was a Judeo-Christian ethic that was a common code. And I could trust that we lived by the same code. And if I can trust that we live by the same code. You’re become predictable and it’s easier to do business together and work together. And I think that’s an important point that gets lost in a lot of the modern dialog. And I also there’s an expectation of me from the community that I will exist and succeed to help you, Luke and you, Henry, succeed also and everybody else in our community. And I think we’ve lost some of that and we’ve got to get it back.

Luke Roush: So to contextualize that sort of broken state, right, it sort of once was but is not currently. And maybe like put that in the context of investing. Are there things about the relationship between investor and entrepreneur that are also concurrently broken because they’ve been shaped by kind of this broader societal dilemma that we find ourselves living through?

Michael Eisenberg: I’ve written a bunch of blog posts about investing as a transaction. Investing is a relationship, and I think a lot of what goes on is become transactional, not relationship. And one of these I love about venture capital is the opportunity to develop a long term relationship with these founders and try to build something meaningful over time and lasting. And I did some work when I switched firms to try to see where I’ve been successful, more successful, less successful investor. And one of these I discovered was co-investors actually mattered. I didn’t think they would, but they did. And I think that’s because, you know, if you get to a point or board where people are pulling in different directions because they’re not predictable and they’re not kind of in it for the same reasons or have the same long term perspective, it kind of comes apart at the seams. And so the way I think about investing rests on a bunch of pillars. So one is relationships are not transactions, two long term thinking versus short term thinking. Three, what I would call virtuous alignment, and I want to dig into this for a second using an example. So I’m an investor in an insurance company called Lemonade, fastest growing insurance company in the world, Lemonade, came and looked at the world of insurance and said, this is a really odd relationship because if, God forbid, Luke or Henry got into an accident, the insurance company would make your life miserable until they paid your claim. You know, they sent an adjuster and 500 questions. And the reason is obvious. It’s a totally misaligned business. They make more money by making you miserable and not paying your claim. And not only that, even the broker’s misaligned because he gets a fee for closing the deal and an ongoing fee. So he actually is not incentivized to provide full data to the insurance company. And so those forms are pretty light, but you move it into an app and a phone, you can gather a lot of data and you align the business, Lemonade said we’re going to take a flat fee to run the pool. We’re not going to make any more money by denying your claims. Not just that leftover premiums will sign what’s called in game theory. Ulysses contract will tie our own hands. All leftover claims are going to charity of your choice. Charity of your choice. So if you fraudulently trump up a claim which you do against your legacy insurance company because you know they’re going to screw you so you won’t do it to Lemonade because congratulations, you’ve screwed the American Cancer Society. And it turns out that most people are good people. They really are. Most human beings are good people. But we designed systems to bring out the worst in humanity because we think of these as transactions and not relations. We don’t trust people. And this goes back to the same before we’ve lost the code of trust and that we need to regain. We’ve lost a code of predictable behavior based on, in my view, predictable community and scripture behavior that once was a common code, and we’ve got to get that back.

Henry Kaestner: So I’m fascinated by that. That’s very, very interesting. We talk on the program a lot about the concept of a redemptive business model, and I love it when you just go ahead and you illustrate through an example like lemonade. Are there other ones that come to mind as well when you think about like.

Michael Eisenberg: Oh, sure, I give you many more when I’ll do another one, which is stunning. I have a company called Rise Up. Now. I’m invested in a guy named Yuval Samet, who grew up poor in a town just outside of Tel Aviv called Petah Tikva. He grew up right above the market. You know, he is opening air markets in Israel. If you’ve been here, open air, fruit and vegetable markets. And, you know, he says parents would go down at 3:00 on a Friday afternoon. Right. The weekend here starts Friday for the Sabbath. And, you know, before the Sabbath start, they bought all the veggies on cheap. So they’re fresh fruits and vegetables. They didn’t have money. And he said he grew up with a mindset of abundance, despite the fact that they had no money because his parents kind of taught him this mindset. And after he sold his first company to Klarna, which the big Swedish e-commerce payments company and lived in Sweden for three years, he said, I’m coming back to Israel to start a company that will use a day to day finance to teach self efficacy and turn that into real business and cash it so banks make money in the same way venture is going to make money. They take fees on your transactions and they want you to borrow money and ironically they actually want you to default on a payment or two because then they get fees and penalties and the best customer for a bank is someone who takes a loan and doesn’t make all their payments but ultimately pays it back. That’s fundamentally misaligned, came Yuval, Samet said using A.I., we can fix this A.I. and community and. You looked at Fitbit and all these people driving themselves nuts, walking upstairs in the middle of the night did their Fitbit number on their watch and say the human mind optimizes around hitting a target, one number, one target. But we’ve got to get that number right. And after a lot of research with single moms, widows, people at the bottom of the socioeconomic spectrum, he discovered that the one number that mattered was how much money do I have to spend at the end of the month from now until the end of the month? And so using technology and WhatsApp and iMessage, you plug in your bank account, your credit card statement, your purchasing habits, and sent you one number once a week every two days, whatever you wanted. How much money I’d spend another month. I catch this. They’ve taken many, many, many, many, many thousands of people out of overdraft and out of debt into savings and even investment. These people have open investment accounts. Do alignment is not only that, these are not the high socioeconomic people in Israel, to say the least, and they’re paying $15 a month subscriptions to this company rise up because they know it gets them out of debt. And then around this is coalesced, a community of 20 plus thousand people who are encouraging each other through challenges to save money and to then invest money. So much so that we did a partnership with one of the largest savings account providers in Israel. We got our clients a 50% discount on fees and they got more signups in one week and then they get in a year through our customers. And this money never existed before because these people were in overdraft super align business with deep values and a deep sense of community that drives very, very rapid growth. And it put a cherry on top of the story. The kind of spokesman for the leading bank in is the largest bank in Israel was like the host of like Jeopardy in Israel and he was our spokesman of the largest banking is on TV. And he called up and said, can I come represent you on a campaign that’s like, wow. And Yuval who by the way, grew up secular, not religious. Tells the biblical story of Elkana from the Book of Samuel and in the Book of Samuel, Elkana leaves his home and goes to the Tabernacle, the mini temple in Silo, which is in Judea, just outside of the hills of Jerusalem. And he would go collect all the people from around and bring them to the tabernacle for the festivals. He was like a collector of communities to bring these people, but he led by example. That’s what Yuval talks about. We can lead by example and collect communities of people for self efficacy in service of a greater goal. And it’s a great business by the way and amazing business. And I just want to say is, I’m not talking about impact investing. My view is very clearly that good values and aligned businesses with the right intentionality of empowering people and helping them do better, create better, more profitable businesses. And that is a virtuous cycle that’s here. Yeah.

Luke Roush: And I would actually say that 100% of what you’re doing is impact investing. This is not as the world would describe it, you know what I mean? I think there’s actually we’ve talked about this a lot internally, that all investing is impact investing. The question is sort of what impact do you want to have? And the reality of what you’re doing is actually having a phenomenal impact, far more impact than what the world has probably described as like impact investing in the last decade. So I love it.

Henry Kaestner: On a personal note, I think back to the movie Chariots of Fire. So I think we’re roughly about same age. I’d say you’re likely to have watched the movie Chariots of Fire, have you?

Michael Eisenberg: I have. I remember it well.

Henry Kaestner: Good. So in the movie, the main character is being challenged by his sister as to whether he should go into an a missions field in China or not. And he responds back that God made him fast and when he runs, he feels God’s pleasure as you work, as you invest, tell us about the times when you feel God’s pleasure.

Michael Eisenberg: I have a confession to make. I have a difficult time personally both answering that question and feeling it, because it feels almost presumptuous for me to think that I would know exactly where God would find pleasure with me. We try to do the right thing and hope that God takes a favorable view of it. But I struggle with that, you know, in kind of having knowledge that I will tell you that when I grew up there, a verse in Deuteronomy which says one shouldn’t say that the strength and might of my hand or arm brought me this greatness. And when I was a kid, there was a very self-effacing view of this, which is promulgated by the great Jewish scholar […] who lived in Spain, where he says that one should never say that I succeeded or I was successful, or it’s because of me that I succeeded. On the other hand, he had a student who lived a little bit after name, Rabbi Nissim of Girona, […] lived in Barcelona and Rabbi Nissim lived, I don’t know what was 50 kilometers north in Girona says, no, […] misunderstands the verse. And really what it means is we’re all given God given talents or genetics as the case may be. And we have talents like the runner in Chariots of Fire, the main character. And you have those. And you should say that I’ve taken my talents and maximized them with the right intentionality for the right service and the right aspiration. And so I relate more to that one, that interpretation of Rabbi Nissim, where you’re given some talent, you got to work really, really, really hard and with the right intentions to do this in the service of the right goal. And I hope and pray that it finds pleasure in in God’s eyes. But I have a hard time knowing and feeling it. Maybe it’s a personality hangup around that or maybe it’s, you know, kind of the teachings I had from my own rabbis and my parents and my grandparents over the time I have emotional story. If I can’t happen today, can I can I do that for a second?

Henry Kaestner: Please, please.

Michael Eisenberg: So I spent the morning at the Israeli president’s residence this morning in a ceremony with my 98 years old grandmother and my 98 years old grandmother. My grandfather of blessed memory were friendly with the president of Israel, Haim and Aurel Herzog. They were friendly before they were president. And my grandmother, who’s 98, you’ve had a relationship with President Herzog’s mother and my grandparents were over at the president’s residence and sometime in the late eighties, and they saw their the booklets for grace after meals, the biblical blessing we all need to make after we eat a meal had been like collected from like weddings and bar mitzvahs, and there wasn’t something kind of regal for the Israeli president. And my grandfather and grandmother said, we need to make a president’s booklet for grace after meals that is respectful and respectable in the president’s residence. And they did that. And I was honored 33 years ago to speak at the president’s residence about this. And at the time, we talked about the importance of the blessings that we all have and in giving thanks and how it should be beautiful and an inspiration. But today, the son of that original President Herzog is now the president of Israel. President Isaac Herzog is today’s president. And my 98 years old grandmother presented him with a unique booklet in his honor, ever the president’s residence of Grace After Meals. And so it is now two generations. But my same grandmother with this thing and in this story deep, I was there. We were all emotional. Today, the president teared up and his wife was crying and say, My job is to cry here. And my grandmother, thank God, has hundreds of descendants. And in my view, this is like a critical piece, which is everyone talked about today that in the blessings and the grace after meals, we’re thankful for all the things we have in the land and our business and our success, etc. And it helps remind us that it’s not about us. And that’s a generational teaching that I’ve learned from my parents and grandparents and I think is super important.

Luke Roush: That’s great word. That’s a great word. One of the things that we always finish our podcast with is just a question on what is God teaching you recently? So I’d love to stay consistent with that and and just hear from you on that Michael.

Michael Eisenberg: Yeah, the thing I’m thinking about a lot is inflation and you say, God teaching me about inflation, the answer is yes. I want to make an observation. Inflation hurts poor people and we turned on government spigots to print money and cause inflation. I want to explain what I think is the scriptural and economic misstep here. And we did this because we had to keep unemployment low. And so we picked up a point of employment, right? Maybe a point and a half. But what we did in return was impoverish more 33% of the wage labor population. And I think this comes from a radical misinterpretation of what our job is. And I think when we look at as people of faith what our job is, we need to look more broadly at humanity than the near term. We need to look more broadly at the effect of things we do then the near term and the Bible is the work of thousands of years that is still relevant today and that gives us a longer term perspective. Then let’s call the next Fed press conference and the next unemployment print, and we’ve lost that long term ism. And I think as people of faith and people of optimism about the future, which comes hand in hand with faith, by the way, we must help others get a longer term view and an understanding of the real impact of their actions on these people. And it’s a large population and unfortunately, large numbers are statistics, small numbers or like individual. And what we got to see all the human beings in this and all these people who are working, but their money is not worth as much. And that’s something that’s kind of keeping me awake at night. And I think, you know, the Bible. Which talks about empowering other people, whether it’s through the commandment of living in a corner of your field, open for other people to collect. That’s not just charity. That’s empowering them to earn a decent living. They got to come work. They got to come harvest.

Henry Kaestner: Yeah.

Michael Eisenberg: And if we have an expectation that people will work and harvest and earn a decent living, we don’t hand them out money and we don’t kind of lower the pain for the short term. We actually increase the challenge, but forced the mutuality and mutual responsibility over the long term. And so that’s what I’m thinking about a lot recently.

Luke Roush: That’s a good word and it’s a good word. It’s a timely word and another construct of reaping what we sow we’re going to reap what we have sown over the last two or three years. I’m grateful for your insights, Michael. Extraordinary. Huge blessing to me just being able to visit with you today and excited for our listeners here.

Henry Kaestner: Indeed. Thank you for being generous with your time as you get ready to go out and spend time with those Stanford MBAs, I just give you a quick blessing for all of us and all of our listeners. Heavenly Father, I just asked if you would allow us to get out there and to do the work you’d have us do that would be guided by your word and by your spirit that we’d feel your pleasure as we go about these things. And we’d see how this work matters for you, as you have instructed us, encouraged us, admonished us, and instructed us in your word since the beginning of time. And that did this book is alive and 4000 years ago. These lessons apply to the way we live and act and worship and we pray for all these things in Jesus’s name. Michael, thank you for being with us. Awesome. Great gift.

Michael Eisenberg: Thank you for having me. This was amazing. I really enjoyed it. Thank you.