The Heart of Impact: Investing with Purpose, Responsibility, and Long-Term Vision
Rick Segal
Book: The Heart of It- The 10 Pillars of Mindful Impact Investing
Rick was the founder and Chief Executive Officer of Rethink Capital Partners. He is also an investment committee member for Rethink Food and Rethink Impact. Segal has served on the boards of many public and private companies, including Hudson General Inc., Air Express Int., Penn Traffic Company, Schoolnet, Civitas Learning, Wireless Generation, Smarterer, Vivvi, Knowledge to Practice, BEGiN, Orijin, Voxy, and Flocabulary.
Currently, Segal sits on the boards of various education technology companies, including Cinematic Health Education, Noodle Companies, and EnGen. Segal is deeply committed to creating better communities through his philanthropic engagements, which are primarily focused on health, education, and providing opportunities for low-income children and the arts.
He was a trustee of the Whitney Museum of American Art in New York City, where he served as treasurer and chair of the finance committee. He also served on the New York Academy of Art board, serving as treasurer and vice-chair, and is chair of the building committee and secretary of the Vero Beach Museum of Art. Additionally, Segal serves as a Life Trustee of New York Presbyterian Hospital.
He is president of the A. L. Mailman Family Foundation. He is also on the board of Plan A, a not-for-profit providing healthcare directly to underserved communities in Mississippi, focused specifically on women’s health. Segal received a bachelor of arts degree in English from Wesleyan University.
Kirby Rosplock
Welcome back to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock. And today, I'm really excited to be joined by Rick Segel. He's founder and former CEO of Rethink Capital Partners. He's part of the investment committee of Rethink Food and Rethink Impact. He's one of the leading thought leaders, practitioners in the impact investing space. And for over his entire career, Rick has helped build and back companies that sit at the crossroads of education, health, social impact, and serves some of the most vulnerable populations. And so I think that's what's so exciting today, to be able to talk to Rick, because he's also authored a wonderful new book called The Heart of It, The Ten Pillars of Mindful Impact Investing. So I'm super excited to have you here today, Rick, to learn more about your book, learn more about these principles and pillars, and just get your wisdom.
Rick Segal
Well, thank you, Kirby. It's always great to see you and happy to have this conversation.
Kirby Rosplock
Yeah. So I'm hoping today that in our conversation, you can unpack a little bit more about this journey into impact investing, because you didn't really start there. You migrated there. I'm curious, what were some of the ahas or reasons that you're like, it's not just about backing good companies or interesting companies. There's a bigger why. So maybe we can start there with just some of the origins and then how that we use into this new book.
Rick Segal
I think it's interesting because life is journey and the steps are not predetermined. But your path does evolve from where you start. Where you start really matters. What also matters is what are the North stars that you personally feel drive you to do anything, whether it's you want to make a lot of money or you want to save a lot of lives or you just want to be left alone. There's a certain DNA there. So my inclination, I started at age 21, went down to Wall Street and learned that there was a whole investment community. I did, as you alluded to, I didn't start. Impact investing wasn't even on the table. But I did start with a certain set of personal beliefs. Generally, anything you do, you should be willing to look yourself in the mirror every morning and say, I have no qualms about what I did and why I did it. I'm not saying you're not going to make financial mistakes, or you're not going to have financial successes. But what you are actually doing, what is the impact or the effect on the world of what you're doing is very important. If you can look yourself in the mirror and say, I'm doing the right things because of the way I'm thinking about the world.
Rick Segal
If that comes to fruition, the world will be a better place. Now, that sounds quite simple, but it is not the general motivation of people. I came from a family of educators, and I'm the only one that took the route of going to Wall Street. And so therefore, I was a bit off track for the family business, so to speak. But as a result of having that connectivity to the world, particularly early childhood education, which really speaks to affecting the lives of young kids at scale and at a time when it's most important. I've always been passionate about trying to impact the next generation in a way that will allow that road to be a little smoother than the one that we've laid out for them. And the other thing that I've always believed in investing is to go with something that is actually needed so that you have the wind at your back. You're not trying to sell somebody something that they don't want or convince the world that they need something that they don't need, you deliver them at a fair value, something that improves their lives, and you take care of all your constituents, you will have a company that will avoid a lot of the missteps and will also have a significant chance of being impactful on those areas that you choose to make an improvement in.
Rick Segal
And that is serve me well.
Kirby Rosplock
Well, I love... Well, first, I just connected the dots that we both come from education families as my mom was a kindergarten teacher and sweet pathologist, and my dad also in addition to working for our family company, also taught graduate school at Carnegie Mellon in the business school. I, too, very much feel connected and compelled by learning. And I love that you have those tightly connected roots of your upbringing to your business savvy, because sometimes people go through education, their schooling, and then they just jump into their career, and then it's almost like divorced from their upbringing. But it sounds like your values really have shaped your perceptions of how to philosophically look at business opportunities.
Rick Segal
I would say, looking back mostly for better. Really, a number of things have always concerned me. One is that I think as we look back over the last 50 years, some things have seriously happened. If you look at what it meant to be a responsible corporation 50 years ago, it's very different. Than what it means to be, I don't know if responsible is the right word, but a respected company. There is a distinct difference between who makes what at the top and who makes what at the bottom. We have constantly, and Elon Musk getting a trillion dollars. This would be inconceivable 50 years ago. To get a bonus that was even double your salary would have been incredible. The other thing is that we have also gone through a complete change in technology, and that has Change the reach that a business can have. Change the amount of dollars that it takes to start a business, particularly a tech business. The size of a computer isn't the size of a room, it's the size of a telephone. And there is an ability to reach an audience through so many different paths that didn't exist before.
Rick Segal
So we have an even greater responsibility because we have a greater ability for influence. We see now to my chagrin, that a lot of the tech entrepreneurs lose or lost sight of maybe where they started and now are driven in ways that I think are not productive for their user base or for the world or even for their shareholders. And I think that that is a prescription for a collapse of a strong capital market. When you think about the basis of doing business, there is a social contract. It's been there for thousands of years. I could do something for you that you couldn't do for yourself. You wanted something. We agreed on what a fair price was or a fair exchange, and we went forward. Now it's, how can I charge you more for something that you don't want and you don't need? And as long as I have a high margin, I'm going to sell you something. And that is, if we We lose. I hate to go on a screed, but we've already lost faith in all of our institutions for good reason. Our political system is in a mess. Our social network, our safety net, is being challenged.
Rick Segal
Our fundamental development as a country, we used to be the leader in health care and in education, and the world looked to us as an innovator and all of that. We're losing all of that status. In order to recover that, we've got to start acting responsibly. By responsibly, I mean, and this was very much a part of the world in the '40s, we serve all stakeholders. We give a fair shake to our workers. We give a fair shake to management. We give a fair shake to the CEO. All of our customers are treated well, and the community that we live in is treated well. This used to be the fundamental basis. If we did that, I wouldn't have to press on impact investing so much.
Kirby Rosplock
That's interesting.
Rick Segal
When you read my book, it's more about corporate responsibility than it is about... I'll go back to say when impact investing was at its peak, it started with people that wanted to have new innovation in the environmental world. That was a heavy investment into equipment, and a lot of it just didn't have the sensible financial strength behind it. A lot of people thought, well, it's noble to save the world, so let's build a better filter. Well, we We spent a lot of money and we got a lot of people dissuaded from believing that this was a mechanism to move forward. Impact investing, nonetheless, and you know this coming from the family office world, there was a generation that was coming into a significant inheritance in the early 2000s up until the President. I mean, it's still happening, but there was a wave. There was a wave of those people that had been... A lot of them were from my generation. I say that to say we lived through the '60s. That has an impact on anybody, however, wherever you go with it. But being a part of that energy and that movement makes you committed to the world in a different way than somebody who didn't see what happens when the world rises up, the world speaks about human rights and life and sanctity and all of that.
Rick Segal
We've gotten very jaundiced and jaded, and we've not had the leadership that we used to have either in the corporate world or in the political world. So a lot of that impetus for those impact investors, we've done a good job of dissuading them from thinking that you can find a way to interact in the commercial space in a way that is sustainable, which is much more important than anything else. Yeah. Because we see So many companies that ride a wave up and then they ride it down. All that does is put a lot of lives in danger and set back a lot of developments. If we return to thinking about sustainability, and I don't mean that in a... Don't use paper in your business. This has been It's built to last. It has integrity. It has the faith of its customers, and it has a significant role in the lives of its users. So when we think about that, it has made it so that we need to make sure that we get back to basics and we build a world that is run by and for responsible citizens who will contribute to... For one thing, that they'll have lives themselves that are full and fair, but also they can also give beyond themselves themselves, face the community, face the world, new ideas, and be part of moving forward in a positive way.
Rick Segal
It takes capital to do that, and it takes commitment. That's where I end up.
Kirby Rosplock
Yeah. Well, I thank you for expounding on all of those powerful insights. You're talking about the great wealth transfer. We have a big socioeconomic divide in this country around the world. And going back to some of the key premises of your book around operating with this heart philosophy, operating with empathy. I look at a lot of the clients I work with and see that their, call it 20, 30, 40 something year olds who didn't live through the '60s have broad empathy. They have have connection and commitment to places and causes and issues around the world that are so far from their backyard. Talk to me about why you think this impact investing book, but also your story and what you've lived will resonate with particularly those that are feeling like, Hey, we're not paying attention to the right issues. Hey, I want to lean in and make a difference. Maybe my investment committee isn't hearing me, but I have some of these ideas because I do think you strike a cord with tapping into operating with some of those core values and bringing those to bear from an investment perspective that should be at the core of how we're thinking about what we're investing in.
Rick Segal
My answer to all of that is we have the opportunity to to really impact the world. I talked about technology. Now we're looking at an AI evolution. We need to do that. Let's talk about AI. We need to do that responsibly. You open a newspaper on any day and you'll get somebody saying, This is the greatest thing ever, and someone saying, It's the biggest threat ever. How do we change the dynamic so that given the capacity capacity to build a better world, we don't put our money, our time, our energy, into destroying that world? Technology is a wonderful thing, but Just like, listen, if you look back over the last 100 years, we did not have the capacity to destroy the world. We didn't have the Adam Bob. Now we have the capacity either by neglect and by subhuman practices that are going on all over the world. We have the ability to save lives, and we have the ability to destroy lives. We also have the means of distribution. I think right now is the most exciting time where you can look at what you're doing, you can look at AI, you can look at this unbelievable way of improving the quality of life.
Rick Segal
We don't give enough credit all the time to the healthy sides of technology and how it has improved lives, even those that are on the lower economic scale can have advantages that never existed before. So I look at this as being both hopeful and opportunistic, but also a tremendous profitable future because we look at things so narrowly. There's fundamentally a lot of populations in the world that have been isolated, have plenty of capacity, but haven't really reached their level of influence. One example, and I know we're getting way off track here, but if you think about Africa as a situation, what are the Chinese doing in Africa? They're going to own it. They're providing infrastructure. They're building their presence. That's a continent with the youngest population in the world, untapped intellect. Within a few years, Lagos is going to be the largest city in the world. We ignore that. It's not on anybody's radar. Not on anybody's, but it's not... That's where... Just like China is now a world leader. When we were growing up, those guys were in the race habits. Now we see they're better at AI, they're better at electric vehicles, and they're also better at building companies.
Rick Segal
We have a lot to learn from those that we ignored. But if we don't do that, We also know that China is not a reliable partner. So we should not cede the world to China anymore than we cede the world to Japan when they were having their moments of growth. So the US, we need to invest wisely, we need to invest smartly, and we need to invest not for next quarter, but for the next quarter of a century.
Kirby Rosplock
Yeah. Well, I'm coming back to your book here for a minute because picking up on a couple of themes from earlier in our conversation about products being mission critical, and then you also talk about for the entrepreneur, if they're all in and how vested they are with their idea, their company, their concept. Tell us about a scenario or just give us ideas in your mind what all in looks like from an investor perspective. What are you doing? Maybe if you're stepping into and wanting to be really more invested in an impact way? What does that look like? What are the behaviors that you're It's interesting because it's not easy to be an entrepreneur, but it's not easy to be an impact investor.
Rick Segal
I don't say that because we have very few vehicles that allow the public to participate, not only because they're maybe may not seeing the opportunities, but also once they get involved, they don't have a pathway to influence that company. So who does? If you look at startup companies or early-stage companies, they are driven by two things: the entrepreneur and by the significant investors who also sit on the board. So let's talk about both of them. The entrepreneur is fundamentally the most important person in the company, and they have taken on the highest personal level of risk. And they are the one that has the most challenging role. They need to manage a growing business, which for the entrepreneur does not provide the same access to wealth that their investors have. The people that come in are... And from the venture side, the venture capitalist is the worst of all worlds because what they do have is someone else's money that is paying them to have a nice, comfortable life and actually a position of power. The entrepreneur has a responsibility of everybody's money, but not the benefit of it and has a very tough path.
Rick Segal
You think about that, a young entrepreneur, maybe they're in their late 20s. They've got some career domain expertise, and then they have a great idea. So they're still They're not married. They don't live in... They don't have a mortgage. They don't have a family. They don't have a spouse. They don't have all of those things. But they don't remember that they're going on a 10-year path, at least. I mean, this is not the Internet era when you come up with an idea one day and you IPO the next. These are 10-year or longer efforts. It is a romantic thing to say you're an entrepreneur. It is a difficult, difficult life. Everybody is mad at you. Your employees worry about your next round and are you going to be sustainable? And did I make the right choice? And those options you gave me, is that an incentive or a disincentive? Your investors, I guarantee you, and I always say this, the worst time in the life of an investment is the first board meeting after you've written a check. You will find out, all investors find out, that businesses don't move in a single direction straight up.
Rick Segal
There are pivots, there are setbacks, there are all these things. The entrepreneur is doing his or her best to deal with the obstacles that come up. They need an ally. They don't need an enemy. Most venture capitalists end up being more demanding and more critical and less helpful. They don't give the entrepreneur the idea that they have a team that is working for them and with them. This is why, as I said, there are not many opportunities as an individual, but there are if you're running the fund. When we have a fund and we invest in a company, we have a seat on the board. It's always important to be that entrepreneur's mentor and best friend. They're seeing things that they've never seen before. The business world is brutal and it's ugly, and it rewards those who know how to play that game. The entrepreneurs have domain expertise, but not business chops, and they don't understand how to manage their business. They don't understand a lot of how do you structure a fund or an investment. So it takes really the combination of expertise and experience wedded to somebody who's young and committed. And that's that very healthy when you could get that.
Rick Segal
That's a very healthy match. We want to make sure before we get into any investment that all investors are aligned and everybody on the board is aligned and really believes that you are building something that is going to be significant in the world or you shouldn't be doing it. Significant in the world might be that it's going to be the biggest seller of Rice Krispies. I don't really care. But nobody goes into a venture deal thinking, Well, I hope I get my money back, plus a little bit of a profit. It's always this is what venture is about. You want to get that significant win and be a part of something that is recognizable, is solid, and you feel like as a You can take to your grave knowing that you are a part of something bigger than yourself. So hard to get that in a board, especially in the venture world, because a lot of them At the junior level, they want to rise in the firm. In the firm, they want to sell an ex-fout. We need people that are committed to the company and to its result because it won't work if you don't have, surround that investor with guidance, advice, and even connections.
Kirby Rosplock
That's such sage advice. And I'm jumping in here just to maybe share with us an example of what you're excited about, what you're looking at in terms of investment opportunities or where you personally feel there's great opportunity in the impact space. And again, I know we could talk probably a whole another hour on that topic But just give me a couple of ideas that you're curious.
Rick Segal
Really, it serves all of my points. This is a company that had the patent developed by a scientist that are members of the management team. They built a device that you can use, a pediatrician to look in your ear. If you think about that, right now, the majority of visits to a pediatrician, and that's the same as whether you're going to the drop-by clinic, the free clinic, the best pediatrician that money can buy, it doesn't matter. Everybody sticks a flashlight in your ear because 90% of visits to the emergency room or overnight help, whatever you're looking at, four kids start with an earache. What is the challenge with an earache? An earache 85% of the time that a doctor looks in your ear, they're looking for redness in the ear drum. When they see redness, they automatically prescribe antibiotics. 85%, no matter who you are, 85% of the time, you go in with an earache, you're going to walk out with an antibiotic. Truthfully, 15% really needed an antibiotic because there's a difference between bacteria and virus. Now, we take that. From the doctor's standpoint, doctors are under seat, and pediatricians are very much in that place.
Rick Segal
They're dealing with a population that is... The kids are young, but so are the parents, and their economic status is yet to be realized for better or for worse. There's not a lot of money in pediatrics. It's not orthopedic surgery or something like that, but there is a lot of critical impact on what they do. If they use this device, which has been proven to have efficacy in determining Using the ultrasound, what is actually going on in the ear drum, that's actually a medical procedure. In a flat in somebody's ear is not reimbursable. That's the same thing as saying, I put a stethoscope to their heart. The doctor now can get $25 for that procedure. That means that's valuable to their time, and that means that they will be able to serve more patients and have... You went to pediatrician, but they've got four minutes. They They have to keep turning them over and over and over. This allows them to have a significant opportunity to be medically appropriate in a better way and also be reimbursed for their time by insurance, which, as we know, is one of the critical things that their back office is doing.
Rick Segal
Going Going forward, the idea that you can now put something in someone's ear, and by the way, you don't have to lean in. Anybody can do it. You just reach over. So this could be your receptionist, your nurse, whatever. But AI is also critical because AI, as we know, can look at large bodies of information. The several pictures of the eardrum and 100 of it, and you can get AI to alert you to any issue and give you a full report. Still need the doctor to read that report, evaluate what's being said, and determine For his or her self, what's the appropriate treatment? But why not do it with intelligence rather than a rudimentary flash light? This is an example where it's a strong business proposal. The numbers are incredible. It's a razor-razor-blade concept. Every time you do a procedure, you have to throw the tip out. Now, going from a plastic tip, which was garbage, to one that has ultrasound in it. That's an expense, and that's the razor blade. This has all of the features that you would like in a business. Now, we'll go back to management. Management of a company, even though it is young, they recruited a top-notch executive.
Rick Segal
They just by coincidence, came out of the ATT, advanced program for executive advancement. This is what I'm saying. Connections to the space are really important because things happen that you don't count on. But this woman who's running the company has been very successful in her career, was also mentored by one of my closest business relationships, gave her the highest marks, and she's lived up to them. So these are all the factors that have to come together to feel good about that investment. And I don't think there's anybody in the audience who's going to argue that this isn't profitable, this isn't a plus for the world, and it isn't a sustainable, innovative business.
Kirby Rosplock
I can tell you, ear infections are not going away anytime soon. And certainly, if parents can have one more thing that helps truncate a doctor visit, mitigate getting unnecessary antibiotics, because I know many parents don't want to have to give children antibiotics if they don't have to. And three, It just helps the science. We'll have much more better data having a tool like this that can- That's a global problem.
Rick Segal
This isn't just, oh, Kirby, you had too many flu symptoms and you've had antibiotics three times a year for six years. That's not what it's about. It's about what's in your food. Everything that we're exposing to just makes us a weaker society. And of course, we're overprotective. There's no question. We hover over our kids in different ways. But we need to be responsible. And antibiotics will make us more vulnerable to flu season or whatever if we overmedicate. So You're not just helping a couple of kids and a few parents. You're changing the whole... You send your kid off to school with 18 other kids. All of them are going to have a disease, and you're going to get it, too.
Kirby Rosplock
Yeah. Well, I am so grateful. I want everyone to think about going to pick up their own copy of Rick's book, The Heart of It. It's just got some great wisdom and insights. There's so many things that you've learned over your career. So I'm so grateful that we had a chance to talk today on the Tamarind Learning podcast, but that you've memorialized all these wonderful ideas and these thoughts, as well as these life lessons learned along this long journey. I'm not going to say you're old, but you've lived and had many experiences here to share. So again, Rick, I'm so grateful for your time, your treasure, your wisdom. Please pick up your copy. We'll have links so that you can get to Rick's book at the Tamarind Learning podcast page. And if you want to follow up with Rick, I'm sure he'd be interested to hear from those who are seeking wisdom and new ideas and new thoughts. Any last closing thoughts, Rick, before we wrap it up here?
Rick Segal
I want to thank you because what you're doing, and I've known you for a number of years, and it is very important. There are people like you that are connecting wealth to, one, the desires of the investor, but two, the needs of the world. You do it in such a professional in a helpful way. You have so much influence. We need more voices like yours, too. So thank you for allowing me to be on your program.
Kirby Rosplock
Such a treat. We're going to have to have you back, Rick. So please know that we might have a second calling here.
Rick Segal
Come back and I'll treat you well.
Kirby Rosplock
Okay, sounds good. Thanks again for everyone listening to the Tamarind Learning podcast today. We're signing off. You can find us on Spotify, Apple, several other places. So please like us, subscribe, and again, find Rick's book, Find Rick, and gain some more wisdom. Thanks again.
Rick Segal
Thanks, again. Thanks, Kirby.
