Tom Lee called me out of the blue one day. Founder of T. H. Lee Partners and a leading private equity guy riding high on many recent successes, Tom was an outgoing, likable, yet no-nonsense kind of person who didn’t make a practice of calling me just to chat. So I was always curious to know what he had on his mind.
On the occasions he’d called before, he had asked if I might have an interest in a deal at which his firm was looking, due to the involvement of founders or owners of color. But this time the call had a different focus on the fallacy of conventional wisdom.
After the pleasantries, Tom got to the point.
“Ed, I’m chairman of the board of Beth Israel Hospital (Boston) and its board nomination committee. We’ve been developing a short list of new candidates to nominate to our board and when your name came up everyone agreed you should be on it. So I’m calling to ask if you would consider joining our board of trustees.”
Before I could respond one way or the other, Tom continued, his tone now more lighthearted.
“You joining our board would be a pretty significant step for us. You know Beth Israel Hospital was founded by the Jewish community in the early 1900s during an era of anti-Semitism and throughout its history it had an all Jewish board. But a few years ago we decided, after a lot of anxious discussion, it was time, after 80 years of having a board just like me, to try something different. So we took the leap and brought onto the board our first Gentile.”
I couldn’t wait to hear what would come next.
With enthusiasm Tom said, “And nothing happened! He was a great guy. Very accomplished. Smart. Nice family. And the board continued to run without a hitch.”
“Imagine that,” I thought to myself.
Tom was not done. “So now we are ready to take the next step. And that is you!”
In case you missed the unspoken intent of his comment, Tom meant they were now ready to bring onto the board not just another Gentile, but an African American one to boot.
Tom knew that such an invitation was long overdue. The delivery of his message made that clear. And I accepted the invitation in the spirit in which it was offered: They’d made the leap and they knew the water was fine.
That call had taken 80 years to happen. During that time, anti-Semitism in Boston had gradually subsided, Jews and people of color had been allies during the Civil Rights era, and shared sacrifices had been made in common cause for social and economic justice. But this group’s desire to remain the same against a backdrop of rapid societal change was persistent and strong.
It was as if they were waiting for the other world around them to change, to catch up, to become more worthy of inclusion in their inner circle. And so they waited, finding comfort in the belief that sameness and its perpetuation was a virtue, centering the lens through which the worthiness of others was determined.
There was only one way all the boxes got checked for inclusion, and being anything other than one of us was a disqualifier. Worthiness was not attainable by any other qualities or qualifications.
Until it was.
So what really changed? My Gentile friend and I had not. We were essentially the same polished, professional people we had been a decade before. Our earlier exclusion from the opportunity to contribute to their success as board members was not because we were unqualified, unavailable or uninterested. It was because 10 years earlier we were simply unworthy.
But then we were worthy.
We didn’t change; we didn’t need to. We just needed to be seen through a different lens. One that refocused on and reconsidered the characteristics and qualities of worthiness. One that allowed a board nomination committee to re-assess the virtue of sameness and the wisdom of the status quo. One that better aligned their practices with their beliefs and morality. One that redefined who belonged as one of us.
So they changed one box that had needed to be checked and — in an instant — the bias that had made us unworthy lost its power to exclude. We no longer represented rough waters fraught with unknown risks, but rather vital waters filled with valued and untapped possibilities.
Does this sound familiar?
Its time to take a very close look at the boxes we check to define who is worthy and who is not.
In the world of impact investing, this is particularly true. Our current investment practices, modeled on conventional venture capital and private equity norms, and reinforced by LP investors and their advisors, have (often unintentionally) reinforced our nation’s racial and gender wealth gaps. Without rethinking of these practices, this trend will continue to be a catalyst for even greater social and economic inequities.
Whereas traditional investing concentrates wealth, privilege and opportunity, impact investing can and should expand it.
So in making impact investment decisions, we cannot continue to check all the same boxes as conventional investors in selecting investment managers, founders, their management teams and the investment opportunity they represent, and expect any different results than we or they are producing today. The wisdom of Albert Einstein should be our touchstone as we rethink investing for impact:
“Insanity is doing the same thing over and over again and expecting a different result.”
Not all of the boxes need to be changed. Many serve us well. But a closer look at too many will reveal “conventional wisdoms” laced with biases — unintentional or otherwise — that pass for fact or truths rather than the unfounded and limiting preconceptions they really are.
Too many aspiring impact investors sabotage their own objectives for positive change by failing to acknowledge that impact investing requires different lenses than conventional investing. By adhering to comfortable, long-established “best practices” and increasingly outdated and disproven definitions of prudence and fiduciary obligation, they reinforce the very same status quo they seek to improve.
Contrary to conventional investment practices which concentrate on managing risk and moderating change, impact investing is inherently about reframing our understanding of risks to intentionally accelerate or enhance positive change.
Because impact investing demands we re-examine our biases and reframe our understanding of risk, it also provides us with a unique opportunity to redefine worthiness and — in an instant — discover the abundant existence, in plain sight, of investment teams designed for and experienced in this specialized form of investing, investment opportunities residing in parallel networks, and entire innovation ecosystems already working to create the beneficial change we seek.
Only by choosing to rethink risk and embrace intentional shifts in our approach to making investment decisions can we as impact investors find new and effective solutions to our most serious social, economic and environmental challenges.
We can’t afford to wait. The call to us to re-invent investing is urgent.
The future doesn’t have to be far over the horizon. When we redefine worthiness, we allow ourselves to become the pioneering leaders we need to be NOW. Our focus changes from what we should avoid, to what we have unnecessarily missed. It changes from, “Can’t make that leap; that water looks too rough to me,” to “Let’s make the leap; the water is fine.”
Reinventure Capital has made the leap. We have redefined worthiness so that it is more inclusive. We have added a checkbox labeled “Hidden Figures” and targeted founders who are women and of color as an extraordinary pool of untapped talent and investment opportunity. We have made a commitment to reach out to them where they are and not wait for them to come to us. And we have staked a claim on their behalf for seats at the table of opportunity and capital, so that together we can create better outcomes for all.
Join us. The water is fine.
Painting: Sea Dress. Artist: Elizabeth Northcut Williams
If you are an accredited investor and would like to learn more about investments that can promote growth companies led by founders who are women and of color, click here to start that conversation.”
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