Impact Investing

Jenna Arnold is listed as one of Oprah’s “100 awakened leaders who are using their voices and talent to elevate humanity” because she doesn’t have much patience for the status quo. She has been called a “disruptor” in every industry in which she has dabbled from elementary school classrooms to halls of the United Nations, MTV, and the White House. Her recent book, Raising Our Hands, was released on a number of Best Seller lists in the summer of 2020. She is the Chief Impact Officer for Rethink Capital Partners, a diversified investment platform with sector-specific vehicles focused on both financial & social returns for our investors. For her work as one of the organizers of the Women’s March, Jenna was recognized with a Glamour Women of the Year award. The New York Times, Wall Street Journal, Washington Post, Forbes, and Fast Company, to name a few, have recognized Jenna’s work as “shaking up long-standing assumptions” and being one of “the biggest ideas in social change” for the work of ORGANIZE, a non-profit she co-founded focused on ending the waitlist for organ transplants in America, for which she was also named one of Inc. magazine’s “35 Under 35” list.

 SKirby Rosplock

Welcome to the Tamarind Learning Podcast. I'm your host, Dr. Kirby Rosplock, and today we're talking impact investing. I'm thrilled to have a Luminary with us. Her name is Jenna Arnold. She is the Chief Impact Officer for Rethink Capital Partners, which is a diversified investment platform with sector-specific vehicles focused on both financial social turns for our investors. So Jenna is not only a CIO, but she's also one of Oprah's 100 awakened leaders who are using their voices and talents to elevate humanity. Some think of her as a disruptor, others a change agent. Whatever you think of Jenna, she is not staying quiet. She's written her book called Raising our Hands. It was released last summer as one of the bestsellers. So she has a lot to say. She's been in all kinds of places, from the UN to the New York Times, the Wall Street Journal, Fast Company, Washington Post I could go on and on, Jenna. So can you just help us get a grip on impact investing? Because everyone talks about it. I don't think anyone really knows exactly what it is, but clearly you do because it's your full time occupation. So what is it?

Kirby Rosplock

Or how do your views differ from what the mainstream definition is?

Jenna Arnold

Kirby, one, thank you so much for having me, and I'm so grateful to you for raising the bar and the community in general around best practices in the space and how we can mobilize ourselves and our resources to make real change. So thank you for creating the space and the conversation. What is impact investing? I would say, what is making an impact in the world? How does one figure out purpose, making sure that they are leaving the state of existence a little bit better than the way that they found it? And what an incredibly impossible, esoteric question that's surely hard to measure with one's life. And then we have now, as humans, found a way to funnel it into a capitalistic state to try to measure it in some way. And one of the things that somebody said, what does a Chief Impact Officer do? And I said, well, of course we try to see if we can measure our investment by way of social good, by way of increasing justice and equity. But what I really do is spend a lot of time calling BS on opportunities and BS on companies or missions. Again, I think it's part of the human condition to want to do well and do good at the same time.

Jenna Arnold

But when you're living in the confines of a venture capital vehicle, it's hard to really identify where the boundaries and where the lane actually exists. So, at Rethink, we're really focused on looking for partners both in the GP and LP, State and surely, entrepreneurs that are really trying to disrupt. And I'm exhausted from using that word, but I just haven't come up with a new one. But partners that are interested in transforming and disrupting systems that have allowed inequity to stay stagnant and we, month by month, year by year, and having been in this space for a number of decades, at this point, have continued to raise the bar on ourselves that at one point, it was how can you build out wonderful corporate social responsibility models? How can you build foundations that do great good? Oh, let's now look at the one for one model, like a Warby Parker or a Tom Shoes. Oh, wait a second. Is one for one actually causing greater problems than it is in helping? Now, how do we take the resources that we want to put into the market and really see how we can turn systems while continuing to keep everybody's footing stabilized?

Jenna Arnold

So it's not just investing in small communities in Namibia that are producing a spectacular piece of art, and that's really important, that there's individuals and resources that are doing that. But for us, it's really like, how can we crack open a system that needs a facelift, that needs an update, that is beneficial for all parties involved? So it's asking a lot of really hard questions of ourselves, of the data, of a mission. And one of the things that I find that's so a little bit exhausting, both in my role as a CIO but just as a human, is this idea of, like, wow, what we thought six months ago was a good thing, actually might need to be adjusted a little bit. So being a Chief Impact Officer means that we just have to be really flexible and very fluid with what it is that we're learning and what it is that we're hearing, because the data is constantly changing. And as more and more urgent voices that in some cases have been intentionally silenced for so many generations are coming to the surface, we have to move ourselves accordingly.

Kirby Rosplock

Okay, so step back for a minute and just explain to our listeners, to me what is really the difference in your day to day as a Chief Impact Officer than a traditional Chief Investment Officer. I mean, what are you thinking and doing differently? How are you approaching the data set that's out there for opportunities? And what does that look like? Can you just give us a snippet, like, jump into Jenna's world for a day? What does that sound like?

Jenna Arnold

Sure. So the due diligence related to Impact is exciting. It can also be frustrating because data sets aren't they're new and there's a little bit of lag behind actually how one can measure impact. So of course, there's the traditional due diligence related to business models, but there's also looking at a product or a company that's focused on education or that's focused on climate or that's focused on waste. And trying to figure out both pull from old data sets really zero in on what hypothesis might be. Which means that there's conversations and research focused in science or focused on philosophers or focused on not just the economics. And the markets and the potential profit shares, but something in some cases that are much more esoteric, because we have entrepreneurs that are really shooting the moon, like really shooting the moon with some of their ideas. And again, like I said, the data there's just a little bit of a lag on it. So in some cases, it's very much building the plane while flying it. That's the state of every entrepreneur around the world. And I would argue these days, like, it's so clearly the state of everything, including governments and institutions.

Jenna Arnold

But it's diving deep in what we know, being really clear about what it is that we don't know, and then being laser focused on the kinds of questions that we have to continue to ask. And not knowing the questions that we need to continue to ask is actually something that is a bit romantic about the whole process.

Kirby Rosplock

So Jenna, tell us what you're most excited about in this investment landscape. I mean, we've had so much change happening from 2020 to 2021. And what are some of the investment themes or things that you're looking at as great opportunity areas in that whole impact space?

Jenna Arnold

Well, I mean, I don't know about you, but my 2020 was really snoozy. Just collectively. I'm feeling like there was a real moment of relaxation. I say that all very sarcastically. But one of the things that's happened, I think, in 2020, as it obviously relates to humanity across the board, we all were forced to engage in arguably the most shared human experience in history, this pandemic, and very specifically for those who resided in the United States. We also sat in the front row of watching an overdue reckoning. For some folks, it was very confusing. For others, be it companies, individuals, institutions, who were desperate to sort of mark themselves on a specific line in history about what they do or don't stand for. I've seen so many different brands raise their hand and say, oh, we stand for this. And we're going to commit X amount of dollars to diversity, equity and inclusion, education, or whatever it might be, and this opportunity to really say, well, actually, let's take another look at the cap table. Let's take another look at some of the employee handbooks. Let's take another look at governance. And I think what's happened is that so many people very quickly said, wow, we have to invest in entrepreneurs representing marginalized communities or wow, we have to invest in social justice causes.

Jenna Arnold

And there's this quick scramble to quickly put things on the scoreboard in an attempt to demonstrate that a corporation and then ultimately the individuals that exist under its umbrella don't stand or do stand for certain things. And while it's exciting that suddenly a magnifying glass is hovering over the most horrific rerun in this nation's history, the torture of marginalized communities, I still had this moment of like, yes, this is a rerun and yes, there have been so many extraordinary entrepreneurs who have not had access to capital. But instead of just quickly trying to figure out where you can quickly allocate a dollar, build a fund, it's really important to take a step back and really question the best way that you can exist in this space. Because sometimes our best currency is not our green dollar. Sometimes our best currency is our relationships or opportunities or piece of advice or wisdom. And so both my excitement and my fear is that everyone's like, we're going to invest in Impact, we're going to invest in Impact and there's going to be focus on race, gender and class and that's it. Look at us like we're doing it, we're good.

Jenna Arnold

And while I welcome curiosity, ambition and intention and surely dollars into this space, I hope it goes deeper than that. And I hope people step into the really hard work of being authentic and trying to understand how they both have perpetuated a potentially harmful system and start looking a little bit more closely at how they can contribute to undoing it, making it better, creating more space for others. And so I don't want to see lots of money come into the space and impact wash. It the same way we all witnessed with the greenwashing, which still is very much happening over the past decade. Plus this idea of like, oh, we're just giving our dollars to these kinds of entities, entrepreneurs, opportunities, just so we can say we did that's.

Kirby Rosplock

Impact washing.

Jenna Arnold

Yes.

Kirby Rosplock

And greenwashing for those who aren't familiar is?

Jenna Arnold

A product has a positive or a neutral impact on climate on the planet just so that people feel like it's consumption or the waste related to it isn't harmful to the environment. Even though there aren't necessarily organizations or trade organizations that can give that authentic stamp of approval. It would be the same thing as saying like every company's had their organic or green or nontoxic pivots in the past couple of years and some of them are really deep and have totally disrupted their product and others have just removed a single ingredient and called it more environmentally friendly.

Kirby Rosplock

So what do you think the attraction and draw is for a lot of families who have rising generation, adult children growing up? What's the allure, what's the sort of passion play that impact provides? And why do you think sometimes families of later generations aren't as open or as inspired by Impact investing. Can you maybe talk to us about sort of Impact investor psyche?

Jenna Arnold

Yeah. It's uncomfortable for me to suggest that there are generational divides, but I believe there are generational divides, and it's what I like to call this sacred end where you can have well intended people who weren't necessarily aware of their capacity to do good in the world until, I don't know, their six year old came home and told them that they needed to recycle. My favorite anecdote in trying to answer this question is that when recycling movements and bike helmets and seatbelts became, when the government in particular was trying to make them more mainstream, they chose to educate third graders from a bottom up strategy with the belief that third graders, if you sort of really drilled into the head of third graders, recycle, buckle your seat, wear your bike helmet, that they would go home and there would be a trickle up effect. And then obviously, as those third graders aged, it would become norm for those generations and then obviously trickle down to them as well. And that's exactly what happened, right? Older generations were taught by their third graders that recycling was a requirement, a moral, ethical requirement. And so I think you see a little bit of that in how to differentiate or how to diversify a portfolio as it applies to making sure that your resources are contributing to positive impact in the world.

Jenna Arnold

So there's again the sacred end of holding former generations accountable for not thinking differently about how they were acting in the investment space, but also recognizing that when we weren't talking about being green many decades ago in the same way that we are today. And so I think there's been a little bit of younger generations, at least I've experienced with my friends and family who are a part of high net worth communities where they very much had to go to their family foundations to board meetings and say, no, we have to invest in solar panels or renewable energy or clean energy. And having had former generations be like, what are you talking about? And I think that's a very fair and very realistic reality of our time. And while it's easy to get frustrated and sort of throw your hands up, like, how do you not see what's so clearly in front of us? It's sadly, as it always falls on younger generations, it's our responsibility to grab some hands and be like, hey, this is our new perspective and we need to think differently, and I'm going to hold myself accountable. And you too?

Kirby Rosplock

No, I was just going to add this little device, right? Our phones, the mobile makes us global, right? I mean, the fact that we don't have to be in Borneo and see rainforest getting cut down or we don't have to be in California to see raging fires also, I completely agree with you that it's a social awareness. And I don't think there's any slight know one generation to another. It's just a completely different reality. Like we have too much information, there's so much to see and experience and really there's a heightened sensitivity, right? And we also have a generation of FOMO like fear of missing out totally. I think click the like on whatever. So tell us. I'm pivoting here a little bit, but I'm going to put out a statement. I want to know true or false what you think is its validity that impact investors have to concede returns when they invest in the impact investment world. Is that true? False?

Jenna Arnold

It's like false capitalized letter underlined italicized bolded with like 10,000 exclamations at the end of it.

Kirby Rosplock

So that means no, you don't have to concede return.

Jenna Arnold

And this is where speaking of feeling sympathetic for younger generations who are like, no, come here, come here. We can talk about, we can do well and do good, I do think that there's a little bit of actually, I'm going to list this for so long, it was like, what's the double bottom line? And then I was just working with some other colleagues in the space and they were like, there's a quadruple bottom line, purpose, profit, planet people. I'm like, oh my gosh, just find another P. But this idea of like, how do you can do well and do good, period, full stop. And listen, all investments have risk and reward trade offs, period. And if you look at venture capital results, our performance and I'm obviously being very careful here because my favorite compliance person will be disappointed in me, or that's a kind way of saying what you'd really have with me. But our performance is not distinguished from any other VC fund in general. I mean, our multiples are consistent with the industry. And when people say, oh, you can find companies that have a positive impact and have the margins that might be appealing to investors, my response is, well then you're just not doing your job.

Jenna Arnold

If you want it, you can find it. It's the same thing when companies say, oh, we can't find talent that represents diverse communities. Oh no, you can if you actually wanted it. This idea that you can't have a return and an impact, I believe, and this is me being harsh, but I'll stand by this is just a cop out from doing the actual work. Again, the risk/reward of any investment has its trade-offs. But if you're suggesting, particularly in this moment, on this page in our history, saying that you can't find opportunities to invest in that both help the planet people purpose and profit of the world in general, then it's because you probably just want to go back to your Netflix series, which at times I don't blame you, but it's just a cop out for not wanting to do the real homework.

Kirby Rosplock

So if you had one or two takeaways to leave for our Tarmanind Learning podcast listeners around the Impact investment space. What's on your mind? What do you think is top of mind for them to know?

Jenna Arnold

I think a couple of things. One, don't be so rigid on yourself when it comes to how to define impact because it is a little bit of a moving target. That's not an excuse to go sit back in the corner and just do what you've always been doing. It just means you have to lean in and pay attention consistently. And there might be a day, a week or a month where you miss a news headline and it takes you a little bit of time to catch up. But welcome to the world of paying attention to the state of the world. And so to me I'm a little bit like continue to lean in and pay attention. Things are going to going to iterate and that's great because there's a lot that we don't know and there's a lot of brilliant people on the front lines of so much of this work. Just wait for them to figure it out, catch up and we might not do something right today. But the learnings from today means that in six months, from year, six years or 60 years from now we're going to be better positioned to do something even better.

Jenna Arnold

So my one takeaway, one of them is get on board for the long haul. This isn't going to be a turnkey. Like there's a right or wrong, it's all going to exist in the gray. The second thing is I'm calling BS on anyone who says they can't do well and do good. Not anymore. Maybe I would have given you a little bit of a pass seven and a half years ago on like a very tiny thing. But today there's opportunity every single sector right now to make a positive difference and have the kind of margins and return that you're looking for. And the third one is just this. Again, a little bit of a moving needle is this level of authenticity. I hope I bless all of your listeners with the ghost of, am I being authentic in my impact investing? Moral ghost person, of like every time you do step into investing with Impact, that you question like am I being performative here? Is this so that I can dodge the eye of the third party? That's probably not even looking that closely, but it's really yourself that you're questioning. Our life's work is to be more authentic with ourselves and that has to be reflected in our professional spaces too.

Jenna Arnold

So as you engage in impact work, constantly take your internal temperature on that and please have more humility for yourself as you're learning. I mentioned earlier in this conversation that we've been witnessing a rerun, a rerun in American history and now suddenly everyone's like we have to talk about social justice issues again. And who knew we had to do this again. Well, like, many tens and hundreds of millions of people were billions of people worldwide knew that we did. And so I think this idea of, like, the information is out there, and there's a lot of people who want to and who are willing to learn and move through a lot of this hard stuff together. But just, like, please come get on the wagon, put your seatbelt on, your bike helmet too, and just be with us. Be with us as we try to figure out the messy landscape of rebuilding, undoing, dismantling, redesigning, designing from scratch opportunities that hopefully will ensure the existence of our species in 100 years from now. And I'm not being dramatic and saying.

Kirby Rosplock

That, yeah, it is pretty grave. I mean, there's a call to action that's undeniable, and we all need to think what our role in participating in it on some level is. And so I just wanted to quickly share a little bit from your Impact website. Here your Rethink Capital Partners website. So this is where Jenna works. This is not an endorsement or an advertisement, but to learn more about sort of the funds and the approaches that Rethink has. We've got four veins rethink education, rethink impact, rethink community, rethink food. So I think this will also help put more context to what Jenna shared, you know, to recap her few takeaways fluidity. We're in motion. So have a little bit of staying power and tenacity and focus on the long term, but know that you're living the Impact experience is going to make it better. Have your BS meter on. So do a gut check and make sure that if you don't think that something's legit, it's greenwashing, it's impact washing, that you stand up, you say something, and you get the facts right. We have to be empowered with good information that we can do well and do good.

Kirby Rosplock

So that statement earlier has no water, and we have to be creative and inventive and then operate from your authentic self. When you approach this space, know that if you're surface trying to appear or appeal, you're not going to have the same power, and people will not see you as a good LP or GP. So I am so thankful to you, Jenna. Thank you so much for sharing all your wisdom here on the Tamarind Learning podcast. And I'm Kirby Rosplock, your host. And we are signing off.