Social Purpose Investing with Joel Solomon

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TSP Joel | Investing In Social Purpose

 

Episode Summary:

One good life purpose is to do as much good as you can and leave the world better. Joel Solomon, the author of The Clean Money Revolution, shares that deciding that finance business and capitalism could be a powerful force for good was an awakening for him. Joel is the Chairman of Renewal Funds, a $98-million mission venture capital firm. He’s invested in over a hundred early growth stage companies delivering above-market returns while catalyzing positive social and environmental change. In this episode, he shares a wealth of knowledge about social purpose investing. When we take responsibility for where we are investing, it reveals who we are as a human and what our belief systems, philosophy, morals, and ethics are.

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Social Purpose Investing with Joel Solomon

Our guest is Joel Solomon, who is the Chairman of Renewal Funds, which is a $98 million mission venture capital firm. He’s invested in over a hundred early growth stage companies delivering above-market returns while catalyzing positive social and environmental change. He also published a book, The Clean Money Revolution: Reinventing Power, Purpose and Capitalism. Joel, welcome to the show.

Thanks so much for having me.

I want to ask you to tell us your own story of origin. You can go back to childhood, college or wherever you want. Where did you start to figure out what you wanted to do with your life?

I think I’ll go back to the pre-Joel roots a little bit and say that I come from two lineages, one of which was a German-Jewish lineage and the other was Russian-Poland-Lithuanian. The one left earlier than the big troubles but came to the United States for the opportunity. The other was shipped away as a ten-year-old to escape conscription and bad conditions in Russia at the time. My grandfather ended up in Atlanta and they had an experience shortly afterward of a Ku Klux Klan march around their neighborhood and moved up to Chattanooga where it was quieter. My father and mother met at the Democratic Party convention in 1952 on a blind date. I grew up in Tennessee.

At eighteen, I went away to university in the northeast and then over the years, my father became a very successful entrepreneur. I spent some time thinking about life. I worked in politics. I started making seed capital investments. I was diagnosed with genetic kidney disease and told I could die soon or live a long time, but there was nothing I could do about it. That led me to think about, “What does the kidney do?” When I realized it had to clean the toxins out of my blood, I started looking at the ingredient labels. That led me into a career in organic food investing along with climate issues that we invest in. A friend gave me her kidney several years ago. I ended up moving to Canada to take some great opportunities here and got to enjoy the Canadian healthcare system, which I never heard the words insurance or money. I get fabulous care and I’m healthy now and all that went well. It did put me into a career of thinking that life’s purpose was to do as much good as you can and leave the world better.

What I love about that story is the awareness of a personal challenge and that’s what I see a lot of great entrepreneurs having is they’ve had some personal problem. They want to solve for themselves and then realize other people have similar problems that they can solve and scale that solution. It generates a lot of ideas. The concept of having a kidney issue and figuring out what it does and then leading into healthcare and into a social impact is quite fascinating.

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The journey with deciding that finance business and capitalism could be a powerful force for good was an awakening because I’d started in the ’60s with lots of questions and all kinds of things were going on then. I was a bit confused about what’s the best pathway. As I found the movement of entrepreneurs who thought that they could do good with a business, I found that very attractive. It was able to combine multiple sources of myself. My mother became an artistic photographer who shows the underbelly of psychology and emotions of humans on the planet. Combined with the optimistic entrepreneur dad and a serious look at the other side mom, I had a nice combination of critical thinking and enthusiasm for making things happen.

I love anything to do with critical thinking and I’ve heard it used in a lot of different arenas including the healthcare industry where for example, nurses need to have critical thinking skills to not just follow things exactly by the book. If they see something going wrong, they need to be able to respond to that. How do you define critical thinking in terms of entrepreneurship?

First of all, it’s a constant, daily critical thinking in terms of where are the opportunities, where are the challenges, what are we doing wrong and what can we do better? What are the hurdles to there? How do we assemble the right resources in terms of people support, boards of directors, other investors and expertise of all kinds? As an entrepreneur of building, we like to call it mission venture capital, we have to first assess what it is we’re interested in and we think we’ll be successful. Secondly, we want to understand the entrepreneurs and particularly their senior team, but as much about the culture as possible. “These people that are adaptive, can they assess what the circumstances are and make good choices?” You do as much due diligence as you can. You never know for sure well, but you’re making a bet on people and on a fairly long-term relationship. That’s how that pathway led to being an investor.

Let’s talk about what you look for besides having a great team when you hear a pitch.

The basics that you would think of are the core of it. Does the premise make sense? Does it look like there’s a marketplace opportunity? Do the entrepreneurs know what they’re doing or seem to know what they’re doing? What is competition? What’s the landscape? What are the resources? All those kinds of common sense things. What is really important to me is to understand the character and personality of the people I’m getting involved with. Everyone sells well or many people sell. What are they like under pressure? What kind of choices will they make when it’s not so easy?

What about when the plan that was enthusiastically presented doesn’t work? It’s more in the challenge points where you find out someone’s character. We do our best, I don’t have any special tricks for it other than experience with humans. I’m going through a lot of different entrepreneur situations and things like that and all kinds of situations, but I think it’s a lot about the inner skills, the psychological and the emotional. How do you handle conflict? How do you handle the pressure? Do you know what the truth really is and how to be very straightforward with people while still maintaining optimism and strategy?

TSP Joel | Investing In Social Purpose

Investing In Social Purpose: The art of understanding our emotional and psychological being is quite under-trained and under-utilized.

 

I think that’s fascinating information and choice of that. Wayne Dyer once said that if you squeeze an orange, you always get orange juice. It doesn’t matter what time of day, if you squeeze it in the corner, you still get orange juice. The thing about how consistent are we. If we get squeezed into a corner, does a different side of our personality come out or are we consistently calm and rational or what kind of choices are we making when we’re under pressure? That reminded me of that little analogy there. What is your favorite way to handle conflict that you could give as advice for people who are struggling with that? Many people say, “Let’s avoid it. Let’s bury it. Maybe it will go away. I don’t want to have that difficult conversation.” What advice can you give of how to handle conflict for people who are afraid of it or just try to avoid it?

It begins with my own journey through that myself. I went and sought help. I tried to be open to the professions that are there to help people. You can talk about the psychological and the mental stuff and the study of human nature, that kind of thing, but there’s a whole other level of knowing how to understand what one is even going through. Am I feeling something? What are the emotions I’m feeling and being able to identify them? If you become practiced at understanding yourself, when are you afraid? When are you angry? When are you sad? When you notice that and you learn that you do have the power to just simply by seeing it and acknowledging it, it’s a huge doorway, but then you can gain tools over time. It might be, “I’m going to take ten seconds and take a breath.”

That gap between stimulus and response is something that isn’t talked about very much.

“I’m going to go for a walk. I need a break.” I need to call somebody I trust and say, “I’m having a hard time now. I’m not sure what it is. Maybe it was whatever my wife said to me last night or my kid or who knows what.” I think that the art of understanding our emotional and psychological being is quite under-trained and underutilized. There are no courses in the university. I don’t know if incubators and accelerators have taken this up these days, but an entrepreneur is typically supposed to be an invulnerable hero of super person magnitude and be able to do everything. That is a mistake to try to be that person.

What I want to be is the most aware and conscious person who’s capable of seeing what’s going on in myself and understanding what the choice options are and then making a clear choice. I’ll say one more thing about this. Often if it’s a business situation, I will go so far as to say, “I’m having a bad day and I’m a little grumpy. I’m sad about something that happened or I’m worried about this or something.” It dispels so much to be vulnerable and honest that way. I don’t consider it a weakness. I consider it a strength.

Brené Brown certainly agrees with you. She was giving TED Talks on it and wrote books about the need to be vulnerable but that’s how people connect and relate. This concept of being aware of your feelings. “Am I afraid? Am I angry? Am I sad? What is triggering the anger in particular?” Do you have any experience or tips for people who struggle? We all have our hot buttons and we try to deactivate them to the best of our ability. If someone you find is constantly critical or a little condescending and you’re focusing on the 1% or 2% things you’re doing wrong as opposed to the 80% and 90% you’re doing right, do you have any suggestions on how you would personally handle that? What do you suggest to other people on how to not get so triggered?

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To be a little more explicit about the professions out there that can help us get better at this, we bring in all kinds of expertise to our companies. One of the last things we’re typically going to bring is HR or organizational development or executive coaching. A good executive coach or those other professions, they have these skills, they’re good observers, they know how to give us feedback about it and they can help us both craft our own behaviors and then a corporate culture. Marketing, sales, finance, there are all kinds of tangible skills that are needed. This gets left off the list.

The EQ, the emotional intelligence, not just the IQ.

We’re in a world that demands more of this than ever before. We are looking at people less mechanistically like we’re machines and robots who are supposed to figure everything out exactly the same way. The modern marketplace and the modern backdrop to that marketplace like social-environmental trends and human trends, labor trends, younger people and how they are going to be in workplaces and what do they want? What is expected of us with a company and our values, morals and ethics? What kind of citizens are we in the world? It’s getting more complex, but at the same time, there’s something very simple in here which is opening to the idea that I can intentionally grow as a human being and as an entrepreneur.

Let’s talk about what inspired you to write your book. I’m always interested in that journey because that is not something that people undertake on a whim because it’s a huge amount of work and commitment. The Clean Money Revolution, what does that mean for people who don’t know?

What Clean Money is about is that I need to take responsibility for what my money is doing, whether it’s in my pocket, whether it’s in a bank, whether it’s invested somewhere. That is my responsibility. It reveals who I am as a human, what my belief systems, philosophy, morals, ethics are. I don’t want to end up invested in things that are damaging people or damaging places. That’s not a sacrifice I want to make. Everything’s imperfect, so I’m not talking about perfect. I’m talking about moving on that scale and taking responsibility. How much plastic do I buy? How do I treat other people through my money?

I got very fascinated with this idea and I had a fairly unique career. You can read about it in the book, but I had a fairly interesting career and I feel like I had a lot of privilege. Some of it had to do with just being in new areas early, which allowed me to be at the beginning of certain concepts or early stages, different business ideas and things. I realized that I’d been exposed to an awful lot and there’s not enough information out there about the moral and ethical sides. We talk about business ethics, but we don’t talk about the ethics around money itself very well. I think that future generations are counting on me to make good choices about my purchases, my buying and things like that.

TSP Joel | Investing In Social Purpose

Investing In Social Purpose: You end up with deep social unrest and serious problems if you don’t think about everyone at some kind of some level.

 

I wanted to share ideas about that and I also wanted to share that there’s a movement underway. It’s called impact investing in the sector I’m in. We’re looking at everything in society and we’re considering the long-term impacts, the manufacturing impacts, where stuff comes from and who’s affected. I wanted to share about that. The first part is the personal journeys. How did I think this all through and get this way? Second, there’s a movement underway. Here’s a personal taxonomy that I may have seen early stages of a couple of subsectors and here’s how they’ve grown. The third part is to talk about the moral and ethical aspect of this state of the world, the crisis we’re facing on all fronts and how do we be the best that we can be.

When you decide what you’re investing in, do you invest in companies only in Canada or the US and Canada?

We are US and Canada-focused. We can’t do international because it’s too much for us to take on. Our investors are from around the world, but mostly US, Canada. We have one advantage, which is depending on what are fairly big swings and exchanged rates, it might be better to be shopping for investments in one country or the other. That gives us an interesting little bit of diversity that isn’t it as common.

When you talk about social impact, is it only companies that are helping the environment or if you see that someone is creating a product or a service that has a positive social impact on people’s life or their ability to buy a home or something, does that fall under something you invest in? Is it only environment?

One thing I wanted to say, by the way, is that we’re raising money and I haven’t updated my bio, so we’re going to push near $200 million under management, maybe over that. It’s succeeding over time. We’d look at all the factors, but we are primarily focused on soil, agriculture and food and everything to do with the environment technologically, which there’s really a vast world of that now. However, we are looking at social factors, we’re looking at the human beings, we’re looking at what kind of a workplace it is. We don’t ignore that but our first doorway has to do with the environment and climate.

When you talk about reinventing power and purpose, let’s take a dive on how do we reinvent power and is it by the way we spend our money or what companies we invest in? Is that what you’re talking about? Are we giving those people more power by attracting that kind of money?

How Do You Handle Pressure? Click To Tweet

What I meant by saying that is that power is distributed in a quite imbalanced way currently on the planet. We have created the benefits to flow to those who needed the least. Tax benefits, access to education, all kinds of things. We are steadily reducing that access for people who have the least. Legislation and all kinds of things keep changing that is going what I consider the wrong direction. You end up with deep social unrest and serious problems if you don’t think about everyone at some level. By power, I’m talking about who gets to have and who gets accessed and who gets to decide. A very few of us relatively speaking, have that power and there are choices to make.

You can be a consultative leader, you can be a dictatorial leader. You can cultivate a safe workplace for ideas and innovation or you can not want to hear anybody ever question you. That’s where power is. I’m using it very loosely there, but it’s deep. If we don’t pay attention to this, I think we’d get in trouble. I was born with less than three billion people on the planet and I could live to see eight billion. How are we going to split up everything and how are we going to take care of each other? What’s going to happen? Who gets to decide who gets what? That’s what I mean by the power in that one.

We often talk about the Ford Foundation committing over a billion dollars in the next ten years to helping people get affordable housing and financial services accessibility. That is where I am really fascinated and the social impact that that has. If you look at Maslow’s hierarchy, until we have some basic needs met and give people access to qualifying or getting some cash without going into debt so much, if everybody’s living paycheck to paycheck then they never get up the hierarchy to start self-actualizing and caring about the planet. If you’re still wondering where your next meal is coming from or if you’re going to pay your rent. I love what you’re doing here. Is there anything from the book that you want to say to somebody, “If you’re struggling with this, you’ll find the answer in The Clean Money Revolution?

I might offer you more questions than answers, but I’ll tell you a lot of stories in that book. I like the parable and the storytelling. The living example to make the points rather than to overly act like I know exactly how things should be done or people should be done. One of the greatest things in my life is the stories that I’ve been able to be exposed to or be part of. Early on, one of those was Jimmy Carter. I went to work for him in my teenage years when he decided to run for president. I worked through that. Another was after I was diagnosed with kidney disease. I went out on seek and search and I ended up caretaking an island that was an Orca Research Laboratory that was founded by the guy who started Greenpeace’s Save the Whales campaign. I saw two examples between age 18 to 25 or 27 where one individual decided to take on some huge complex task and both of them actually succeeded at it through vision, grit, learning and going for it. Those were very helpful to me and then in the entrepreneur world, I get to see other stories and it goes on from there. It got me in the pattern of stories as the best teaching methods.

You’re singing my song. My whole book is Better Selling Through Storytelling because Plato said storytellers rule society and it’s as true now as it was 2,600 years ago. The more we can become storytellers to get people engaged in caring about a particular issue, I think that’s where it hooks the emotions is storytelling.

I’m so glad we’re aligned on that and it’s the ballgame. You can learn it in a lot of different places, but doing it takes practice. You’ve got to remember.

What’s something you’re working on now that you’re very excited about?

We have 300 investors at this point and influencing those investors, their families, friends and advisers that there is a different way to invest. There’s a different way to make money and here’s a whole bunch of stories that you’re going to get exposed to. That’s one part. The second is proving to the citizenry and to industry sectors and everyone else, that there are better ways to do things and that you need to pay attention to that continual improvement. If there are practices that you’re waking up to and you’re going, “I don’t know if I want to tell my grandchildren about what I did to build this industry or the sector or this product.”

There are increasing ways to make better choices because human ingenuity both do well on greed. Human ingenuity does a great job on accumulation and domination and that kind of thing. My friend gave me her kidney. That’s unfathomable really. We’ve gotten used to this kind of thing and in every different part we look and we don’t like something in the world. We’re in an era. If we can maintain it then don’t blow it. We’re in an era where the possibilities of human vision, passion and caring could make a fantastic future or we could blow it.

Let’s stay optimistic that the vision, the grit and the passion will allow us to not blow it and in fact continue to have great social impact. I can’t thank you enough, for coming on and sharing your wisdom and the insights from your wonderful book. If people want to follow you, where should they go?

Joel Solomon, I’m in the major social medias. That’s one way to find me under my name. The book is available, The Clean Money Revolution out in the world, you can get your bookstore to order it. You could go to your favorite online bookstore and etc. The two websites, RenewalFunds.com is about the businesses we invest in and how we do what we do. The JoelSolomon.org, this podcast will be there and lots of other interviews, ideas, blogs, connections and things like that.

Thanks again, Joel.

Thank you so much.

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Tags: creating social impact, mission venture capital, reinventing purpose, Renewal Funds, social purpose investing, The Clean Money Revolution