Transcript of Liesel Prtizker Simmons

Gino Borges:

A lot of us in the impact realm, or business in general, put forth a particular identity, a front-facing platform that often camouflages our human side. Many times we find ourselves vulnerable, bewildered, and confused – sorting things out in real time and trying to make sense of our situation. As we bring our voices together and share a behind-the-scenes look at that migration from the inner world to the outer world, it helps us all understand that we’re not in this alone.

For those of you who don’t know Liesel, she is the Co-Founder of the Blue Haven Initiative, one of the first family offices created with impact investing as its focus. She’s also the Co-Founder of the IBP Foundation, a private Chicago-based foundation focused on achieving universal primary education. She attended Columbia University and serves on numerous boards. Liesel and I connected through Toniic, an organization trying to bring awareness to our responsibility and stewardship of our resources for the outer world – not just for profits’ sake but considering social, environmental, and governance outcomes as well.

Liesel, start with where you’re at right now. Take me to where you’re based with Blue Haven Initiative.

Liesel Pritzker Simmons:

I’m currently at my home in Concord, Massachusetts. Hopefully, my two kids who are napping will not make a surprise appearance. For Blue Haven, it is physically-based in Cambridge, Massachusetts; however, we manage a portfolio of investments that’s all over the place. Most of our direct investing is in sub-Saharan Africa and East Africa. We’ve got a team there and also here in Cambridge. We work with a lot of partners all over the place. While we are very tied to and proud to be in Massachusetts, a lot of our investing is all over the map.

Gino Borges:

Concord, the home of Ralph Waldo Emerson. History plays such a deep role in the East Coast whereas it seems the West Coast is still in its teenager phase.

You studied African history from what I understand, but there’s a difference between studying African history in college and then becoming mission-focused on affairs in Africa. Can you take us through that journey on where that pivot occurred?

Liesel Pritzker Simmons:

My grandmother’s history always interested me. My grandmother, my mom’s mom, was British by heritage but born and raised in Calcutta under the roof of her father, an English civil servant. She was raised in colonial India and didn’t set foot outside the country until she went back to Ireland to marry my grandfather. That was the first time she’d ever left India, and it was fascinating for her. I remember hearing her impressions of the Colonial Era. Growing up in Chicago in the ’80s and 90s, I felt fairly removed but also not very far. This wasn’t that long ago. The remnants of colonialism in many places all over the world are really complicated, peaking my interest in this colonial past that was a part of my own heritage.

In college, I knew I wanted to be a history student. I ended up taking a lot of colonial history classes. I just ended up being more interested in African history. I was trying to be an African history major, but there weren’t enough classes in the history department to even let that happen. So, they kept kicking me over to sociology and anthropology which was not okay. They are different disciplines.

It also got me pissed off around this idea that academia thinks that Africa doesn’t have history. “There’s no history. It’s anthropology… right?” That’s become obviously less and less of a popular point of view. But, something about that pissed me off and made me definitely want to be an African history major. That was a large factor in why I wanted to study that.

I was at Columbia when Jeffrey Sachs started the Earth Institute; there was a lot of conversation about sustainable development versus traditional development assistance in the form of grants and money. How do we use market-based solutions? Microfinance was really popular. It was right around when Muhammad Yunus won the Nobel Peace Prize. Finding that quite interesting, I wanted to go into international development, and I liked the idea of market-based solutions. I come from, on my dad’s side, a very entrepreneurial family. Excelling in business was also something that was very important to my dad and to my uncles on that side.

I liked the combination of international development using private solutions. So, I took some time off school and volunteered. One of my placements was at a microfinance institution in Tanzania. One of the other things I always thought was particularly interesting was largely ineffective MFi. This was when people were starting to get more mobile phones, and mobile money was beginning to proliferate. This idea of digital finance was barely starting to enter the microfinance scene. Traditional microfinance wasn’t working very well in these parts of Africa, but maybe through some of this technology innovation, we’d be able to expand access.

Here we are several years later, over a decade later, and we have a syntech portfolio focused in Africa inspired all the way back from my grandmother’s colonial history.

Gino Borges:

What is the intention of microfinance, and how has that worked out over the years? Where is it currently?

Liesel Pritzker Simmons:

That’s highly debatable. From my perspective, the original idea asks how do you extend credit? Micro-credit. How do you extend credit to people in communities that don’t have formal banking institutions, people without bank accounts, but people who want to start a business and need a loan to buy supplies for their micro enterprise? One of the big innovations around that was how to extend credit to somebody where you don’t have a lot of information on them and they also don’t have the assets to lend against: group lending models. When you don’t have collateral, can you create social collateral amongst a group of people who will? You give the group a loan and therefore you’re more likely as a lender to get paid back.

Traditionally, the repayment rates in a lot of places that do this group lending model have been pretty high which is great. However, the transaction costs for this style of microfinance is exceedingly high. It’s very hard to get to these places, to train loan officers, and then to meet once a week with a group. It’s terribly inefficient. It’s stayed in the realm of nonprofits for several decades. In some areas in India and in Mexico particularly, there were some institutions that were actually able to create efficiencies, IPO their microfinance institutions, and scale. But then, a lot of concerns arose that they were raising interest rates to be really, really high and usurious. There’s also a lot of debate over whether or not extending credit to people actually improves their income level.

There are studies that say it does, and some studies that say it doesn’t. Either way, there are other products that are really important, for example, insurance, which is extended the same way. So, it’s not just credit, savings, and insurance; it’s being able to help people pay school fees in a more reliable ways that tie directly to their savings accounts. There are a lot of other financial services that people need besides just credit. The real innovations have been around those different financial products beyond just credit and different delivery mechanisms. Now that pretty much everyone in the world has a phone, we’ve realized that maybe people are more credit worthy than we initially thought. So people are doing micro-lending directly to consumers on their phone. There’s lots of different products. But roughly speaking, that’s where micro-finance started and how it’s moved more into the digital world.

Gino Borges:

Does your impact focus travel through to the businesses that you’re willing to fund? Or is it likely they could be doing a gas canister business on the side of the road? How far does the intentionality travel through and then if it does travel all the way through, how do you reconcile this idea of how much control you really want of the situation?

Also, because you’re trained in history and colonization, how does African culture experience “African-ness” with the colonial tools of credit and so forth? I’m trying to understand the edges between the intentionality and honoring culture.

Liesel Pritzker Simmons:

Credit as a concept has a lot of historical African roots. In Ghana, for example, for as long as anyone can remember, they’ve had a Susu loan. They’ve even got a Susu collector. These are versions of credit in these markets already. I don’t see it as something that’s imposed. Rather, it’s how to take these concepts that are already there and make it easier for people and for those transactions to take place.

When it comes to the companies that we’re invested in now, we want that company to be providing a product or service that does have a positive impact. For the companies that are doing payments processing or invoice discounting, we see the impact as advancing an innovation above the status quo. We’re making it easier. For example, one of our companies in Nigeria does the payments processing for online businesses. We don’t check every business that uses Paystack, but it’s a good thing that the market is able to run more efficiently, and more people have less friction to bring whatever they want to the marketplace. That’s ecosystem-level impact that we think is important. It’s something we get to enjoy in this country; shouldn’t everybody have the ability to bring product to market easily? We wouldn’t dictate what business people can do in that sense. We just want the thing that we invest in to be helping markets run more smoothly.

That’s one of the benefits also of being a fairly nimble family office. We don’t have to have companies that look good on glossy reports. For example, Paystack, the Nigerian payment gateway company doesn’t “photograph” well. It’s a backend. It’s a technical tool. How do you photograph Stripe in the U.S. or PayPal? While it doesn’t photograph well, it’s hugely important in building the marketplace outwards. It’s the plumbing that makes one part of an economy more accessible for a lot more people. Thus, we are okay with taking a step back from the beneficiary. There are a lot of impact investors that don’t have that luxury because they’ve got other funders that need to see the direct connection. But, the market-making is still really important to us.

Gino Borges:

Take me to the point in your life when all of a sudden you have an abundance of resources, more than what you can use, your family can use, and so forth on a day-to-day basis or in the future. Take us through the moment where you decided not just to create a family office but decided to do this in an impactful way.

Liesel Pritzker Simmons:

I was in a strange position in college when I inherited control over all the assets that I was going to get when I was 21, basically with no strings attached. It was a little nuts and also pretty overwhelming. This is actually part of why I took some time off to volunteer because it was really scary, and I wasn’t sure what to do. I did what any “touchy-feely” rich kid does – I went to India. I came back from that experience and felt like I didn’t deserve it.

At the same time, I realized the wealth was a powerful tool, and I want to do something good with it. I started off by doing what I was told to do: take a portion of it and set up a foundation. Give it away. That’s what you do when you have a lot of money and you care about the world – you set up a foundation. I took a portion of my assets and we set up the IDP foundation which my mom runs. It was focused on micro-finance for low-cost, private schools in Ghana. The foundation still has that focus and has now served almost 700 schools throughout different regions of Ghana with loans, trainings and other service offerings. I worked with my mom on that program for about four years, and I realized that I was spending 100% of my time working at this foundation, set up traditionally to give away 5% of the assets a year.

I was spending 100% of my time on 10% of my assets. That just didn’t make a whole lot of sense to me, and I was frustrated by that. I was pigeonholing myself, looking only at the impact of a particular set of dollars that I had arbitrarily decided was the right amount to put towards impact.

For the rest of the money, I didn’t quite know what it was doing. I’d call into my quarterly meetings. I had very professional financial advisors,  but I didn’t know what any of those investments were doing. Then, I started to ask my financial advisers about micro-finance investment vehicles which at that point had been around for awhile. They were pretty resistant. They said, “it’s very risky, I’m not sure you understand the currency exposure.” But, I did. I was working in Ghana where the CD just tanked 24%. I understood the risk, but I liked that I knew what that money was doing or where it was going.

Luckily for me, all of this started happening right around when the term “impact investing” was coined. SOCAP started. The engine formed there and started to be a name for what I wanted. I was very lucky in my timing to come around when there was enough infrastructure to actually help me to build a portfolio.

It was about 2009 when I made my first investment and then kept marching through. In 2012, I decided that I wanted to invest in impact with 100% of my assets. Philosophically, that made sense. The dollar is a dollar. I don’t understand why $1 can have impact, but we’re not going to care about the other dollars. I don’t philosophically understand that, and I know that I’m in an incredibly luxurious position to be able to make that choice.  I’m not trying to call bullshit on other people. There’s a lot of reasons why people can’t do that. But since I can do it, I damn well better.

Maybe it comes from the guilt around being an inheritor. I’ve always felt like I don’t deserve any of this, but I do have a mandate to steward this to the next generation. On my watch, I want to know what everything is doing. I want to be able to explain to my kids why we made that investment and why we said that was going to have a positive impact. I think it helps ease the guilt just a little bit.

Gino Borges:

When you received the inheritance, was that a timing element or was it the passing of one of your parents?

Liesel Pritzker Simmons:

It was neither, actually. It was the settlement of a a very contentious lawsuit. It was a testy period in our family’s life which has since been water under the bridge now. It’s been enough time.

Gino Borges:

How has your family been involved with the creation of your family office? I’m guessing there were some conversations with the one dimensional financial advisers who probably thought you were nuts. But, you also brought your husband, Ian, along for this journey. How did you integrate your family into the family office process?

Liesel Pritzker Simmons:

In the very beginning, we met with Jed Emerson. That was quite helpful as we were finding our investment committee. He came on as an advisor to help us think about this “stuff.” One of the first things he had us do was to sit down and think about our family mission statement and values. One of the ones that came up as we were doing this exercise was this sense of integration. Holistic transparency is really important to us as well. Although some assets might be mine and some assets might be his, we want to think of everything together. This is our family. These are things we’re building to go forward. I want to make sure that there’s transparency and integrated decision-making as well.

Sitting atop of all these assets, we have two investment committees, one for our African strategy and one for the whole family office. We formed an investment committee that can vote and sit on both of those investment committees. Our managing director of our venture portfolio also sits on these committees. We have some internal staff and some external advisors as well. From a governance standpoint, we can see everything that’s going on and vote on everything that happens. Our plan is to bring our kids into that process when they are old enough.

Ian has really informed me with his background in community and student organizing. He’s a political creature. He also understands that we can do the best we can in the private sector, thinking about some of these large problems, but ultimately a lot of the problems that we’re facing are policy failures. How do you get a well-educated, engaged citizenry who can actually make it to the polls to vote? How do you get a diverse group of candidates? How do you get a better pipeline, a more diverse pipeline, of candidates that can run? How do you take money out of politics?

The public sector correlates to some of the things we’re trying to tackle in our investment portfolio. That’s what he cares a lot about. I’m ashamed to say that, before we met, I wasn’t very engaged in those areas at all. I thought “oh, sure, policy, it’s all ineffective and it’s bureaucratic. Let’s just have companies solve some of these problems.” That’s a very dangerous point of view. Our partnership has really made us think about how we can use our convening power, our capital, and our influence in all different ways to make a dent on some of these structural issues. We should be standing up for people exactly like I should be standing up for a wealth tax publicly.

We should be talking about wealth and equality and what we are doing to really combat that from a policy standpoint. This part of our work has started to elevate, especially with political events going the way that they have. It’s important. In the impact investing world, we just want to focus on the investment piece, but we also need to be regulated. We need good rules in place because investors are just terrible at self-policing.

Gino Borges:

You loosely mentioned that you plan on bringing in your kids. What does that look like in terms of your current image in terms of integrating your kids into the impact?

Liesel Pritzker Simmons:

I don’t know yet, and I’m sure that whatever I do, I will make the wrong decision. I feel like that’s like my right as a mom. I do see a lot of wealthy families try to nearly deny that they’re wealthy to their kids even though they still take a private jet, or things like that. They pretend that their kids have no idea that they come from a wealthy family. If your kid can use Google, they know. And, their friends are telling them. Just because you haven’t had the conversation with them doesn’t mean that they don’t know. It’s very much like sex; just because you haven’t told your kids about sex, they know.

So, I’d like to be the person to start a healthy dialogue about what wealth means in the context of your family. We try to do that, and I recognize I’m on the radical transparency end of the spectrum. I don’t know if that’s the right approach, but my husband and I are very transparent with the world about why we think it’s important to use our wealth in this way. I think the cat’s out of the bag for them. What we’ve started to do is just show them. We invest in community solar projects here in New England. So we go visit them, we go see them get put up, and we talk about where power comes from. We talk about why this school is now going to be powered by the sun instead of by oil or by dinosaurs. We try to bring it down to their level, and at least to show them things that we are a part of. My oldest is four, and my plan now is to at least show them that this is our family business. I also recognize they may be totally uninterested in investing or in business, and that’s okay, too. I at least want them to know what we have done and then we can figure out how they want to take it going forward.

Gino Borges:

What does radical transparency look like? There is a connection between our inner world of vulnerability and our willingness to be transparent. How do you navigate vulnerability? It takes a certain amount of faith and centeredness. How have you negotiated the human frailties of existence and still have this interest of radical transparency?

Liesel Pritzker Simmons:

Part of the delicate balance is sharing what we’re trying to do and genuinely working hard at it. There’s always a risk that we’re gonna find something horrible in our portfolio exposing a hypocrisy underlying all of it. I’ve always tried to be very careful about our intentions. We are trying to pay attention to all things, but we’re not perfect, and we can screw up. We’ve never had a massive blow up, but that’s not to say that it’s not going to happen. We try to be careful, and I try never to sound preachy or “holier-than-thou” because I’m not.

I’m the most concerned that there’s some awful thing in our portfolio, some scandal that gets exposed. Luckily, we weren’t in TPG, so we avoided that one. The benefits of just being honest vastly outweighs the negatives. It’s a privileged position to be able to be honest. I’m not representing a bank. I don’t have to collect clients. I don’t have to worry about how I’m going to get promoted. I don’t have to worry about what my sales are or how many tweets I’m getting. I don’t have to worry about that because I don’t work for anyone. We don’t run other people’s money. We just run our own. I have very little accountability. I have the privilege to talk about whatever I want, and that’s extremely privileged. I never want to sound like “everybody” should be doing this. Not everybody can, but for those of us who can, it’s helpful. What do I have to lose? I’m the luckiest person I know. That’s the privilege of this wealth and this autonomy.

Gino Borges:

What do you think the opportunity cost is to a culture that’s not creating conditions for people to be vulnerable amongst these capital markets? It acts so anonymously and without any sense of consequence on the social and environmental realm.

You’ve articulated well how fortunate and privileged you are. I’m wondering if maybe part of the gift is how we all contribute to conditions that create trust and nonjudgmental moments to unleash the human social capital within. My belief is that the allocation of capital often runs in parallel to the energetic position of the person. For example, someone who’s restless inside may be very exploitative outside. Such as, if I’m not loved and I’m hurt, I’m probably going to be very violent in the world. If somebody’s going to be violent in the world AND has money, they can do a lot of damage really fast. You said as an example, you’re aware of the privilege position, but what can we do as a collective to really support vulnerability and inner work as a way of redesigning capital into more intentional ways of being?

Liesel Pritzker Simmons:

I don’t know the answer to that one, but I think listening is a piece of that, taking time to truly listen and give somebody the benefit of the doubt. Try to see it from their point of view, and don’t rush to judgment so quickly. That’s tough to do in the impact investing space. We’re very “judgy.” We need to allow for time and space, for nuance. It’s a powerful thing – just being a patient listener. Unfortunately, that’s not something that we value that much in this society. Patience and listening doesn’t feel like an output. It is, but we haven’t structured any kind of compensation for that kind of an output.

Gino Borges:

That’s a good point. Could you imagine if people just got paid to listen and then subtracted for talking? Our balance sheet would readjust really fast.

Do you think that the impact investing space is “judgy” within itself? Or is it more in the outer world that the impact investing space seems judgmental?

Liesel Pritzker Simmons:

Both, actually. However, impact investing appears superior to traditional investing because I think we’re being more honest about what things cost. It is a superior way to interact in the financial world.

But even within ourselves, there can be a thought that this investor is full of bullshit or that this investor is green washing. Other people say it’s too “touchy-feely,” and they don’t know anything about markets. There are squabbles within the realm, but I think that’s okay though. That’s a sign of a market or a community maturing. Factions and styles arise within it.

Gino Borges:

At what point does maturation of the space become its own limitation? It’s in a full blown evolutionary space right now where a lot of people get to come in with a lot of energy, but there tends to be a disciplinary imperative to constantly try to organize it. I know you’ve been very instrumental in helping Toniic get off the ground along with other impact groups. How do we keep the aliveness behind our community present and upfront, making sure that the imperative to organize and bureaucratize is present, but it’s not the leading initiative?

Liesel Pritzker Simmons:

Being patient with people who are new to this or entering from their particular point of view is important. Stephanie Cohn Rupp wrote a piece on EFT trends, specifically around impact investing losing its way. It was a great piece; there’s lots of things that I agree with. But, that article could have easily been published three years ago, and it will easily still stand in two years, in five years or in seven years. We’re always going to think we’re in a crisis mode or that something is wrong.

But then again, there are also people at large financial institutions that have been trying to get impact investing on their books for awhile, and then they come to market with one product they’ve been trying to jam through the investment committee and finally got it on. Is it good? Is it perfect? Is Jed gonna think it’s going to change the world? Maybe not. But for them, it was a huge win. For me, I think that’s okay. We’ve got to let people come to it from where they are, and then hopefully we will all get better. We can improve, but everyone has got to start somewhere. I don’t like when people come to market with something that is marginally impactful and pretend it’s absolutely going to save the world. If this is a screened ETF, we’re not saving babies, but it’s better than this other ETF. In the least, we can be honest about where things are.

It’s the dishonesty piece that we want to watch, but I’m okay with there being a spectrum. I don’t care what a big financial institution names their fund. If they want to use impact language when it isn’t, I don’t care because we’re going to find that out in the due diligence process. It’s going to get exposed when we look at what the underlying investment is. I don’t know a whole lot of investors that would look at a funds document saying we’re going to return 120% and say, “Oh, well it says right there it’s going to return 120%. We’re good.”

Who would look at the marketing materials of a fund and say it’s impactful because it was right there on the cover? We have to do the work. If they want to green wash something, it’s the job of the investor to call bullshit on it and say, “I’m not gonna do that. I’m not going to put my money there.” That’s why I am less worried about that aspect of impact. That’s part of our job as investors: to look under the hood and say, “Nope, this is bullshit.”

Gino Borges:

In 10 years from now, more investors will be able to discern those kinds of things. What does the impact space look like a decade from now to you?

Liesel Pritzker Simmons:

There seems to be a bit more consensus around impact management and measurement tools where a few years ago everyone would have said there’s no way that we’re ever all going to agree. I’m encouraged by some of the uptake of The Impact Management Project. They just came out with a new toolkit. Of course, it won’t solve everything because we’ll not all agree about what metrics are the most important, but that’s okay. We will get better at what reporting and management looks like.

I’m also hoping that there is more conversation on the policy front as well. What are ways that we get environmental and social risks embedded in company reporting? What financial information is available for investors? What actually needs to go on a 10k? We’re going to make some progress in that area because people are doing great work around why ESG indicators are actually material to financial performance. There’s just more information and more disclosures that investors can parse.

Gino Borges:

Wouldn’t it be interesting if externalities flowed all the way down to the k-1 statements where you’d see that there is an environmental loss or gain with this business? Or, if we could see the social loss or the social gain or governance loss or governance gain? Right now, k-1s are obviously just pure finance.

Liesel Pritzker Simmons:

That would be amazing! Another form I would love to see improved is 990s from foundations. I want to know what percentage of their endowments were aligned with their mission. Every foundation has to have a mission statement. It can be gobbledy-gook, but you have to have a mission statement. What if foundations had to self-report and have to report every investment? Rather, what if they had to self-report what percentage was aligned with their mission? These are tax-exempt entities. They’re supposed to be for the public good. An endowment is invested for the public good. That’s a lot of money in there.

Gino Borges:

Most of us don’t know what a 990 is – what is the 990?

Liesel Pritzker Simmons:

That’s the form that foundations need to fill in every year to maintain their charitable status. It’s a reporting requirement.

Gino Borges:

You’re suggesting that they report on the gap between what is currently their existing portfolio and their mission.  An example would be their mission is environmental protection of wetlands, and yet their portfolio has Exxon, Shell, and Chevron in it who have oil rigs in precious wetland?

Liesel Pritzker Simmons:

Right, exactly. If that already wasn’t a problem with the board or the investment committee of that foundation, if the accountant brings it up, or the tax attorney, maybe that’ll get through.

Gino Borges:

Do you think that there’s going to be occupations that are going to grow out of the impact investing space, like impact accountants and impact attorneys to feed the ecosystem? I hear people say “I want to do impact investing” followed by “my current financial advisor, I share information with them, but they’re really not impact.” I say, you’ve got to go to somebody that’s doing it full time out there; otherwise, you’re wasting your time. There’s enough people out there doing it full time. I’m thinking that we also need not just financial advisors, but we need accountants. We need impact accountants that are part of this larger ecosystem supporting each other in integrative ways using the same language. That way, when you and I get on the phone with accountants and lawyers, we’re not starting at ground zero constantly because every supporting profession is starting at ground zero.

Liesel Pritzker Simmons:

I do agree. Lawyers – that’s been an area that’s overlooked, but they’re starting to organize impact conferences for lawyers as well. A few law firms said, “we’re gonna make this part of our brand identity; we’re good at this.”

I would like to see it pervade all of those professions eventually. Maybe it’ll start as an area of expertise within law firms. If you’re going to that law firm to help you with estate planning, then they’ll get the person who’s the expert in estate planning. Maybe there’ll be an impact expert as well. I do think it would be great if these things were to be integrated into actual law and business schools as well. I am starting to see it more in business schools, which is fun.