Purpose AND Alleviating Poverty with Jacqueline Novogratz CEO of Acumen

Ilham Kadri: I'm so excited to be here today with the one and only Jacqueline Novogratz, who is truly one of the most inspiring leaders I've met of our times. Jacqueline is the founder and CEO of Acumen, a nonprofit global venture capital fund that uses entrepreneurial approaches to address global poverty by investing in companies with the purpose, her organization has positively impacted 650 million people, more than a half a billion, and looks just amazing and tells me we need more Jacquelines in the world. She's a brilliant entrepreneur, an author, and quite frankly, a beacon of light in the world. I think there is no better example of a leader who embodies the power of the AND than Jacqueline. I'm so excited for this conversation. Jacqueline, thank you so much for being here.

Jacqueline Novogratz: Oh my God, you, you humble me and the honor is truly mine.   Inspiration for solving the problems of poverty

Ilham Kadri: Thank you, Jacqueline. And in general, I always start the same way, Jacqueline. I love to start my podcast finding out. How our guests first found their purpose. I mean, you have these immense raison d'être, very deep. I know you grew up in the U. S.,  in a large Catholic family that moved around a lot. Was there a key moment in your early life, Jacqueline, that r ally made you passionate about, maybe you learn it later, but made you passionate about solving the problems that led to poverty. Did the spark start with your upbringing or did it develop later?

Jacqueline Novogratz:  I mean, my mother would say I was born that way. By the time I was six, my father was in Vietnam. I was thinking all the time about why the children there had such a different experience than the children in my country. And, it was, it's really, Ilham, something that a friend of mine, Marie Howe, who is the poet, was the Poet Laureate of New York, said to me, we were laughing about girls from big Catholic families and how,  when we were little in the late 1960s as a six year old, if you did well, the nuns would give you little cards with stories of the saints. And Marie said, well, you know, Jacqueline, those were the first stories of women who wrote the narratives of their own lives. And I reflected upon that, Ilham, and I thought they were also, for me, the first stories of women who lived for an idea and were willing to die for it if necessary. And I truly think that that was a big part of my wanting to make change in the world and wanting to live for something noble, if you will.

Becoming a banker

Ilham Kadri: Amazing. And here we are. And, you know, like, you know, a path is not linear in human lives. An important part of your journey, of course, was becoming a banker. And you have a brilliant story about your first interview, which I think was at Chase, right? Can you tell us about that very first interview and how becoming a banker really put you on the path to where you are today?

Jacqueline Novogratz: It’s funny because I listened to your great podcast with Mo Ibrahim and Paul Polman, and both of them referred to themselves as accidental business people.  and I was definitely an accidental banker. I knew that I wanted to make change in the world. And, and yet, because I had paid for college, university,  I wanted to take a year off to do what my friends had been doing the whole time that I was working. And so my parents,  who are very psychologically oriented said that I could do that as long as I went through the interview process. And so somewhat reluctantly, I put my resume in the boxes at that time for foreign affairs and economics majors. And I got this interview with Chase Manhattan Bank and I walked in and there was this cute guy sitting across the table and he said, Ms. Novogratz, tell me: Why do you want to be a banker? And it was the one question I was completely unprepared for, of course. And so I said, well, actually I don't want to be a banker. My parents are making me go through the interview process. And he said, well, I find that very sad because if you got this job you’d be in 40 countries over the next three years learning the economic, political and social streams of those nations. And of course, I was a child that was so curious about the world from a family that had no money to even take a flight. And so I said, Do you think we could start this interview over? And he looked at me sort of in disbelief. He said, sure. So I literally left the room. I knocked on the door and I walked in, shook his hand, reintroduced myself. And he said, Miss Novogratz, tell me, why do you want to be a banker? And I said, ever since I was six years old, all I ever dreamed of was being a banker. And obviously there were more interviews after that. I shifted my orientation and I got the job and it changed my life. 

Founding Acumen and the emergence of patient capital

Ilham Kadri: So after a few years at Chase, you left And traveled through Africa with the dream of providing financial financing solutions at that time rights for underserved communities. And you did a number of really interesting things such as working for the World Bank, the UNICEF, and you even co-founded Rwanda's first microfinance institution, and I've heard you talk about how important Africa is for you and how it shapes your identity. Being from Africa myself, it means a lot to me,. So, so here we are in 2001 you founded Acumen and for our listeners who may not know, Acumen invests in patient capital is very unique to hear about patient capital, because that's the first time I hear about it. For me, capital is urgent. And I hear, I see patient, the best candidates for the power of the AND. And Acumen is investing in businesses that provide critical goods and services to, to people living in poverty. Can you explain to our audience what patient capital is about and how Acumen has made such a huge impact?

Jacqueline Novogratz: Yes, absolutely. And to your whole theory of the AND we look at markets or we look at charity. And too often charity creates dependency and markets overlook low income people. And so patient capital said, okay, if you believe that people want to solve their own problems and can, how do we use the tools of the marketplace, the tools of business and enable low income people to get access to goods and services that are affordable, that are accessible, and that are delivered to them in ways they appreciate and value.

And that was the beginning of patient capital, that we could take philanthropy and invest it in 10 to 20 year equity and sometimes in entrepreneurs that were building markets that had never existed before for low income people, they needed that long because they were building not only a new product, but the distribution systems, the financing systems, the marketing systems, they were fighting bureaucracy and corruption.

And so we've seen the power of patient capital to go where no other investors will go. And that then has allowed us to build now a half a billion dollars in for profit funds, but that we've structured in ways that still allow a level of patience and accountability so that we can grow the companies that the patient capital enabled.

How to build sustainable and profitable companies

Ilham Kadri: So indeed, I mean, it fits perfectly to, to the podcast,  purpose, which is this power of the AND about holding these opposing values together at the same time. And this is a perfect example because your whole organization shows that you can have both social impacts and financial returns. And you have a chapter about this in your fantastic book. I have it: Manifesto for Moral Revolution. Here we are, beautiful book, and this was my favorite chapter, by the way. I think this book is simply required, you know, reading for any business leader today. And I said it to my teams when I read it. So at Acumen, you want to use capitalism as a means to solve problems rather than a means in itself. And you've been enormously successful in that. So tell us about the recipe. How did you make it happen? And what advice would you give to leaders who want to build companies that are both profitable and have that positive impact on society?

Jacqueline Novogratz: I think with so much innovation and when you're pioneering something new, you don't know what you're doing from the beginning. You learn as you go along and make progress and make mistakes. And, if I had advice, it would be to turn on it’s head the way we too often think about change. You said we're looking at the tools of capitalism as a means, not as the end in and of itself. If what we're looking at is simply profitability, we know how to do that. If we're looking to solve problems, and in the case of what we do, at the nexus of poverty and climate, you've just made it a whole lot harder for yourself.

However, if you start with the problem you're trying to solve, and build from that perspective, and don't limit yourself simply to traditional venture capital, there are a myriad of tools and partnerships that you can tap into to actually scale profitably these companies. I literally just got off an investment call for Somalia, which is something else and it's part of what we're doing to bring  off grid electrification to 75 million of the most vulnerable human beings on the planet,  who happened to live in 16 African nations. If we just went in with the traditional investment model, well, we wouldn't go in, but we know that there are terrific off grid solar companies that need a different kind of incentive to go into nations where they will be needing to do all the things that we did 15 years ago when we started investing in in solar: build, build markets, find new talent, grow that talent, etc, etc.

And so in this case we could use philanthropy so that the companies can actually go into those nations. We can then have a debt facility that has first lost capital technical assistance on the side. And in some cases, Ilham, I think this has to be our future. Once you have the business model, Then use your social capital to partner,  with government, with corporates and the supply chains, we can't solve these problems ourselves, but you can build profitable, important companies that also are not only sustainable, but are helping to provide a solution where both governments and business have traditionally failed.

Most inspiring companies Acumen invests in

Ilham Kadri: Yeah, amazing, actually, in a way, you are reimagining philanthropy because I think you, I'm not sure which book now you have been also saying that traditional philanthropy may fail and fails, right? So you need to, to see how you can make it sticky.  And you talked about building an ecosystem, right? So tell us about some of the most inspiring companies you've invested in, and who are making also huge difference in the world?

Jacqueline Novogratz: Since we’re talking about electrification, just very quickly, we used philanthropy to back the first 250K investment made in a company called DLite in 2007.  We put in several tranches as well as several fellows, which I'll talk about, to a point where the company could grow to probably 50 million in sales. And then we, we started to, that was the beginning of building the for profit impact funds. That company has reached over 180 million people now with light and electrification. So that really taught us that you could build companies that matter at scale, that serve the poor. What we didn't understand, and thank you for asking the ecosystem question, was that in many of the markets that we operated in, the only way to make this work was to think about the larger ecosystem that needed to be built around it, but that the company could help enable.

And so, as this one company started to show real results, other companies like it started to be built and then, and this is classic business, and then that company was vertically integrated, so it had to do the marketing, the distribution, the credit, all of that itself. So, then other pieces of the ecosystem started to develop, including mobile banking in 2012, which allowed for people to sell a solar home system and the customer could pay through their phone on a daily basis,  in ways that provided cash to the company and a means that wouldn't break the customers over the course of paying off what they were buying.

That then led to a distribution system because now you had a company with customers that had a habit of daily payment. So you could also sell through those companies cook stoves. And then the customers said, well, we also want television. And in Acumen's case, we had invested in a solar and in an education company that then discovered that there were so many households now with solar televisions that they're reaching about 13 million people a day with education digitally through solar televisions, then there were solar irrigation systems.

So the adjacent possible came into being because you had these intrepid entrepreneurs, those entrepreneurs would not have had a chance with business as usual. And that's what's so exciting to me. I think that we need to be more creative and expansive in the way that we think of building businesses that include the overlooked, and give them a chance to actually be part of solving the problems, rather than think that we can solve the problems ourselves, and that's really at the heart of this.

The beauty of Acumen’s manifesto

Ilham Kadri: Gosh, this is beautiful, and it's actually a leadership lesson you are giving us, and it's all about leadership. You talked about management, you know, courses and training. And when I read, I think it was your Acumen Manifesto, I think it's one of the most beautiful pieces I've ever read. And I led purposeful transformation in companies, and I always start with the manifesto inside, you know, with the teams. And you talk about the standing with the poor, listening to the voices. You talk about investing as means and not any end. You talked about the humility to see the world as it is and the audacity to imagine the world as it could be. That was probably the most brilliant, profound, you know,  declaration. I read it again and again and the patience, the kindness, the grit and humility.

So talk about that humility actually, right? And how, Jacqueline, you can deliver the power of the AND with humility and audacity and put them in the balance. Can you expand on what you mean by that?

Jacqueline Novogratz: Absolutely, and thank you so much for what you've said, Ilham. It just says so much about who you are. And, we use this manifesto every day because there's no way to just make the kinds of decisions we have to make without holding values and tension and audacity and humility, I believe, is at the core of what we would call the moral imagination, which is something that we need so much more of, in our business leaders, in our government leaders, in our civil society leaders.

We have a lot of leaders, but the audacity to think that they can change the entire world with whether it's with a single technology that they have developed or whether it's with their program to give a certain thing to every low income person in the country.  Audacity we have in large supply. And then we actually have humility in people that are there to listen to, to feel empathy.

And they so often think that audacity is almost a bad word that these big dreams. And so finding those individuals who understand that the only way we make change in the world is to imagine the world in a different way to see what could be. But we will not build that unless we have that deep humility to recognize where it's broken, why it's broken, not from a shame or blame game, but from a systemic understanding that starts with daring to immerse ourselves with the people we most want to serve, not to help or save, but serve.

And so, examples, I have so many examples from 23 years of doing this, but, to, again, with farmers. You know,  thinking we could sell any product to them,  because it was useful, it would help them make money, et cetera, et cetera often was co-opted by the fact that the people we were trying to sell product to really cared about beauty.

They really cared about status, and we could say to ourselves. Well, that's ridiculous. Beauty status, I think people are very poor. They need, they need, should have this other product. And I would say health and public health is where you see the worst. Instead, why wouldn't we make something more beautiful so that people would value it and want it? And,  it changed everything for us. 

The importance of storytelling

Ilham Kadri: Amazing. Amazing. So obviously you are an exceptional storyteller. And then I realized,  we're doing my homework about you, that you wanted to be an English major,  which must have played the role, right, Jacqueline. So what did that teach you and what advice would you give to young leaders, but also less young leaders like me about the power of storytelling?

Because sometimes we are too, you know, maybe technical in telling our stories. Maybe we don't speak to the hearts, but the minds.  and I've heard you say before something that's really stuck with me, which is, especially if the words scare you, write them down. Something like this, that seems to me to be the essence of a good storytelling, right?

Jacqueline Novogratz: Yeah, I actually think you're a great storyteller, and I do think we are the stories we tell. And I work in places like Nigeria and Pakistan, where the world has told stories that are one dimensional. And frankly, diminishing. And so what are the stories we need to tell each other so that we can want to find solutions together?

And yet, can we tell stories that also hold truth? And what frustrates me so often in the world is we see one or the other. We see the all good story or the all bad story. And so the stories that matter hold that same humility and audacity. They hold the truth of what is difficult,  and so do they hold the aspiration and the beauty of what is possible.

Can we show the human parts? Can we show the connection? Because what we're missing as a world is that deep sense of connection. We invest in chocolate companies and coffee companies that remind me that every cup of coffee we drink essentially keeps a farmer in poverty.

We could change that, but we're not changing that. It's only when we look at the whole system and start to recognize how broken it is, and that at the heart of this is human beings. Just like us trying to feed their families and yet a Colombian farmer that’s growing coffee is dependent on whether Brazil has a bumper cop prop or not. There's got to be a better way so that those farmers can have more dignity in their lives and not just price takers. So that's my hope for storytelling is that the head is not enough and the heart is not enough. We need to tell stories in a ways that connect, that use our different layers of identity, to help us see that we are part of the problem and we are part of the solution.

Ilham Kadri: yeah. And that's the beauty, Jacqueline. I'm sure you heard this many times. What you are doing is about not only showing that you're right, you are part of the problem. But we are part of the solution and the problem is solvable. Second, in this immoral context, you also show that this is not for charity. This is also combating and productivity inefficiencies that it's building wealth for the whole humanity. And I think that's just an amazing way to really combat poverty. And one of the most memorable stories you tell as well is in your book, The Blue Sweater, who I love as well. Which was the title that's your first book.

I believe, and I love, you know, really getting into it. And, and you showed here, as I said earlier, there is a new way of doing philanthropy away from the traditional one, which can succeed. Can you tell us that story of that blue sweater and a bit about the book in general?

Jacqueline Novogratz: Sure,  this goes way back,  to 1986.  and ten years prior to that, in 1970, Actually 12 years prior. I was given a blue sweater from my uncle that had zebras in the front and mountains. In the back and the and I loved the sweater and wore it all the time until I had a very humiliating moment where I dispersed of the sweater with my mother and hoped I'd never see it again. It was at least a decade later when I was building this microfinance bank,  when women also had just gotten the right to open a bank account without their husband's signature. And I had left my career on Wall Street. I was running through the hills. And ten meters in front of me, I see a ten year old boy wearing my sweater. And I thought, and this was of course prior to cell phones, the internet, anything. 

Ilham Kadri: Unbelievable. Unbelievable.

Jacqueline Novogratz: So I run up to the poor child, who's terrified,

Ilham Kadri: Yeah.

Jacqueline Novogratz: But I had to know. So I grabbed him, I grabbed the neck of the sweater, and I looked at it, and there was my name

Ilham Kadri:  Unbelievable.

Jacqueline Novogratz: written on the back of the sweater, on the tag of the sweater, which is You know, in a big family, and I, and the little boy ran, ran away, and I never got to find him again, but I have held that to this day as a metaphor for how interconnected we are.

Pushing back against the naysayers

Ilham Kadri: Absolutely. And oh, gosh, I can continue like this forever. We're getting to the end of the podcast. Listen,  I want to talk about courage in leadership too, because I know that when you were building your company, you know, and while some of us were building companies on building some one planet, you know,  frameworks, Often people are told, and I hear it from many mentees as well, that they are crazy or too optimistic or idealistic.

How did you deal with this, Jacqueline, and what would you recommend to others who have these big ideas but run into the naysayers?

Jacqueline Novogratz: Thank you for that question.  and I do think it's very humbling because this is a moment where we all need to dig deep into our reserves of courage. And so I'll say three things. Number one, sometimes people see Acumen today and say, Oh, well, you've reached 650 million people, blah, blah, blah, blah. It's easy for you. The truth is the very essence of the model was based on a lot of failure and frankly building a financial institution for women in Rwanda only to see a genocide happen. I probably lost a hundred friends in that genocide. I also saw how our systems that bifurcate good and bad, saints and sinners, profit and, and purpose cannot be the system that will work in an interconnected world.

And in those 40 years since we have only gotten more interconnected and I would dare say, So, two, I knew that the systems that were in place were not working for low income people. I wasn't sure exactly of what the solution was, but I had an instinct that patient capital could be part of the solution.

As you said, and this is point number two, It wasn't just the first three years. I would say it was the first 10 to 15 years. There was a lot of humiliation. A lot of people telling me, you're too idealistic, you're too crazy, you don't understand business, la di da di da. And now I have learned that when they tell you you're crazy, it usually means you're onto something. So again, what is that, what Howard Thurman would say, what is that sound of the genuine? What is the truth that you know? In my meeting today,  on Somalia. We were trying to make a decision because some of the really well intended,  both banks, frankly, and donor agencies want us to make investments in ways that won't be great for the people we're there to serve. And so do you give the money back? Try again to change the conversation? And these are hard, so I'm not saying this is easy. So, number two, when they say you're crazy, you're on to something, but don't think it will be easy. And number three, I think the courage that we all have to have now comes with a philosophy and a decision.

Either you believe that we are in a system that cannot fully be changed, maybe we can tweak it and, and, and therefore we can flow in that way, or we can have. The audacity to imagine new systems to realize that systems are created by human beings and those of us, particularly with power, have it within us to change it and the humility to realize it will be hard.

Embracing the beauty

Ilham Kadri: Thank you. I've never seen, you know, beautiful soul and humanist as you, so thanks a lot. Before I let you go,  I always finish my podcast with we want to know about the other Jacqueline, right? I know your work is your passion. We could hear it, see it, but I'm sure that you also unwind too, right? What do you enjoy doing most outside the office?

Jacqueline Novogratz: I have a huge family. There are 24 nieces and nephews and six siblings and their partners all living within walking distance in New York City. So the team teases when I'm not in the office, if I'm not working or somewhere else in the world, I'm with my family.

I love to read. I love theater. I love theater. I love stories. I love to, I used to love to run, but I ran. too many miles and hurt my foot. And so, but I love the, I love the physical. I love nature. I think I just love the human journey. I love feeling fully alive in this world. And,  I feel so lucky to be alive in this moment.

And maybe that is my last point, which is that so often when these problems are hard and they can take everything out of you. And I'm 40 years into trying to solve them. And sometimes it would be really easy to feel like a failure in some areas. And that's why, not just the willingness, but almost the defiant embrace of joy and beauty has to be part of this.

And the secret that no one ever talks about is that if you fully immerse in this work and you see places like rural Morocco, Nigeria, Pakistan, Colombia. Not for the problems that need to be solved alone, but for the beauty and the possibility that being there will immerse you in. If you can do this, then I think it's the richest way to live a life.

Ilham Kadri: Jacqueline, I've never said this way, we love you as simple as that. Thank you so much for being here. I really mean it when I say you're one of the most inspiring people I've ever met. And what you have to say is even more important today when things like kindness, empathy are not always at the forefront of the conversations.

Although being, you know, tough business people, and you are not only an incredible business leader, you are also a beautiful person, beautiful soul, a humanist. As we heard, I'm so honored that you came on the podcast. Thank you for inspiring us, Jacqueline.