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Dotcom Patrick.

Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, methods, stories and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date. An investor field guide, dotcom. Patrick O'Shaughnessy is the CEO of O'Shannassy Asset Management, all opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shannassy asset management.

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My guest today is Jacqueline Novogratz.

Jacqueline is the founder and CEO of Acumen, a nonprofit global venture fund that uses entrepreneurial approaches to solve the problems of poverty. Our conversation touches on how Jacqueline left Wall Street and ended up starting a microfinance bank in Rwanda, how she thinks about investing in character, how creating dignity plays such a major role in her investments, and how governments and businesses can work together to solve the world's toughest problems. It is a bit of a departure from my normal investing conversation, but contains powerful lessons for many investors and builders.

I really enjoyed our conversation and hope you will, too.

Jacqueline, I've been so excited to do this with you. We're going to talk about today is a bit of a departure from my normal investing conversations, but I suspect it will be one of the most interesting I thought an interesting jump off point would be to have you tell the audience the story of the blue sweater, the name of your first book.

And I just think such a neat way to frame our conversation.

Thanks, Patrick. It is wonderful to be here with you. So I was about 10 years old and my uncle Ed gave me a blue sweater that had zebras running across the front in Mount Kilimanjaro, kind of strategically placed across the chest. And I wore it all the time, including into my freshman year of high school when I was walking across the hall where all the football players hung out and one of the football players shared a particularly the comment about the mountains on my sweater now that my adolescent curves had kind of changed the contours of it.

And I believe that there's a humiliating moment in every adolescent child's life. And that certainly was mine. And so I went home, told my mother we had to get rid of this horrible sweater, and we summarily threw it into the goodwill. And I thought that was the end of the story. Fast forward more than a decade and I was nineteen eighty six. I had left my career on Wall Street. I was starting the nation's first microfinance bank in Rwanda in Central Africa, when, while jogging through the hills, I saw this little boy 10 feet away from me wearing my sweater.

I shocked. I ran up to the child, grabbed him by the collar, turned it. And sure enough, there was my name written on the tag of his sweater. And I've held that magic as a metaphor for how interconnected we are as a world and how our acting can impact people we might never know. And when you think about it, that was 35 years ago. If the world was interconnected, then we are fully interdependent.

Now, I'm really interested in this phrase used, anticipated talking about this, but you mentioned this idea that every child might have a humiliating experience. Can you say a bit more about that? It sounds like something you've thought carefully about.

I don't know if I've thought so carefully, but I've certainly experienced it and witnessed it in so many of the young people that I've known where I think part of becoming and we are always becoming as human beings, there's a sense of do I belong, how do I show up? And when all of your hormones are raging and your body is changing and you are changing. And maybe certainly in my generation, we've had a lot of people to talk to about what is actually going on, although I certainly see it even today, there are inevitable stumbles that feel so outsized in the moment that we never forget them.

And I would wager that everyone listening, including yourself, can think of one of those moments as you were moving from childhood into that twixt and between liminal state before adulthood. The world is weird.

The way I would connect this and this is completely by happenstance. Just the other night, my wife asked me what the most embarrassing moment of my life was, which I guess is sort of the same question. And to your point, I could instantly think of something that happened on a backpacking trip when I was 12 or 13 years old in Jackson, Wyoming. And it's amazing how easily it was to recall every detail of that scene.

I think you have to tell us what happened just out of a sense of fairness. It was mostly just how much younger I was than everyone on the trip. And I was prepubescent at that age. And everyone else was we didn't know this when we signed up for this backpacking trip. It was sort of designed for bad kids. And I was very much not a bad kid. These were 15 year olds that had done drugs or had behavioral problems or whatever.

And I was so much younger and so much smaller. I was small for my age anyway, but I was probably a full foot smaller than just about everyone on this trip, very interested in girls. And I won't go into the details, but just had a huge crush on one of the girls there and just too young. And it was humiliating in the moment, but sort of wonderful in hindsight. Like, I'm so happy it happened because it was definitely a coming of age trip where I got to see rough and tumble kids two or three years older and a foot taller than me.

And I grew up a lot on the trip. So but I can remember it very easily.

I'd love to hear how this blue sweater moment maybe kicked off what now has become just a fascinating journey for you. Maybe we could jump in for a moment on Acumen and just hear a bit about sort of the origin story there or an overview of what acumen does for those that aren't familiar, how it's evolved.

Yeah, so as I said, I had started my career on Wall Street in the early eighties when the world was in another economic crisis, particularly in Latin America with debt. And I was working at Wall Street Bank, mostly in Latin America, and I saw how much I loved how numbers tell a story. I loved the tools of banking and at the same time when I didn't love was how so often low income people were left out of the banks altogether and in fact, in that era often wouldn't have the confidence even to walk into the doors or through the doors of the bank.

And so I left that job, that long story, but after pitching to my boss that I would start a banking for low income Brazilian's and him summarily turning that idea down. I moved to West Africa and ended up in Central Africa and Rwanda started the first microfinance bank with a small group of wanting women. And there I saw the power of using philanthropic back capital to use the elements of the markets, but not being controlled by the markets. But I also saw that so much of development was driven by top down charity and government, and that if the markets too often excluded the top down charity and government approach, too often created dependency.

And it was a time, too, of seeing that maybe we were defining poverty all wrong, that we saw it only in terms of absolute income numbers. But my experience of it was about a lack of choice, a lack of opportunity. So in two thousand one started acumen, trying to bring together the elements of both the rigor of the marketplace without being limited by the market's own limitations. At the heart of it was this idea of patient capital that we would raise philanthropy and we would invest it as equity or debt for the long term, 10 to 15 years in those entrepreneurs who I think are so key to solving the world's tough problems and those entrepreneurs who were willing to go to those places that markets and governments had failed the poor.

So all the basic goods and services, whether it's health care, education, electricity, agriculture, water, housing, we would keep the capital with them. We would try to help use our social capital to bring in additional kinds of capital and connect them to corporations for their supply chains, et cetera, et cetera. We would measure what matters, the social impact, not just the financial impact. Any money that came back to Acumen would be reinvested in other innovation for the poor.

It's hard to believe that was 19 years ago and our model has evolved. But we have essentially invested about one hundred and thirty million dollars, but moved another eight hundred and fifty million into our companies as co-investors have seen increasingly viable opportunities for them to be part of social impact. And those companies have in turn brought those critical services to over 300 million low income people. And so it's exciting to see that it works, but it requires not just thinking about capital, but investing the right kind of capital and importantly, investing it into the right kind of character and connecting it to the right community if you want to create real change at scale.

Can you talk about that word character? So specifically, what have you learned about why that's a good investing filter or criteria and what that means to you?

For me, increasingly it's become the number one investing criteria because we're going to work in markets where people make two to three dollars on average, where there is no infrastructure, there is often the great presence of bureaucracy, corruption, complacency, where there's very little trust and where you need entrepreneurs who know how to build trust, how to show up, know how to stay for the long term, have great perseverance, grit, know how to take feedback and build a team who can complement their weaknesses, not just glide on their strengths.

And that's character. We've invested in entrepreneurs that have built great companies. But if you want to change a system, in some cases change a nation, you have to bet on character. I have some real examples. Where it's starting with one or two entrepreneurs has actually resulted in changing entire ways that nations organize some of their basic services or a whole ecosystem have developed around it. I wonder if you'd be willing to zoom out for us.

I was always a careful student of Hans Rosling and now Max Roser, who I think is sort of continuing his tradition of studying sort of the changes in the world's income and poverty levels and education levels and all these key things. Could you describe kind of through the acumen lens, maybe going back 19 years through now what the market looks like? How have things changed for the better or the worse? What's sort of the lay of the land today in the market that you're trying to address?

So let me actually go back. Thirty years, because 1989 was such a critical year for the world, it was one of those tectonic shifts, not unlike this moment with the pandemic being another one of those tectonic shifts. I had just come back from Rwanda when I was in Rwanda. The average income was one hundred and twelve dollars per year. In nineteen eighty six, women had just gotten the right to open a bank account without their husbands signatures for the first time in history.

And typically it was not unusual to see at least one out of every five children die before they reach the age of five. In some countries, it was much higher than that. That was during the Cold War. Aid was predominantly the way that many governments got the budget that they had to then deploy with very different levels of talent then you see today. And so when the Berlin Wall fell down and capitalism had, quote unquote beat communism, it was really game on shareholder maximization as an ethos.

I was at Stanford Business School. Even in our ethics class, we learned that it was not just our fiduciary, but our legal responsibility to maximize shareholder wealth, and therefore it was our ethical responsibility. And over the next 30 years, we saw this great expansion of freedom and over a billion people get out of poverty. If 40 percent of the world lived in extreme poverty 30 years ago, that number is below 10 percent today. Huge progress. On the other hand, that freedom that came from markets and accelerating technology also came at a cost.

We are now at a moment in history of extreme inequality, climate change, a level of divisiveness and divide ness that I certainly have never seen or experienced in my lifetime. And so funny way those same forces that brought such promise and opportunity have the potential to destroy us as well. And that's why I think this is the moment to learn from 20 years in a way unwittingly investing in and building companies that decidedly stand on a stakeholder model and that focus on insisting on including the poor and the vulnerable, that I actually think that we've got real models for what purpose driven stakeholder capitalism can look like, specifically focusing on the poor 12 years ago, if you look at electricity, one point five billion people in the world had no access to electricity.

That was one hundred and thirty years after Thomas Edison invented the light bulb. So neither government nor the market did a very good job at actually bringing electricity to all people. And yet we assume that countries will develop, even though people are staying awake at night with a kerosene lantern. That's a situation that's productive and frankly, immoral, not least to say also dangerous for everyone. And so that's again, where you've got a story of the mix of markets and philanthropy, where you get two guys out of a business school with a thirty dollars solar lantern and a big dream that they're going to eradicate kerosene, which is what most people in the world who are poor depended upon.

What separated them from the others was moral imagination. They saw the poor as full human beings, customers, and that the onus was on them, if you will, to create a product that the poor would trust, could afford. What value could finance, could access? Not easy to do. That's where patient capital comes in. We invested in the beginning just a couple of hundred thousand at the prototype stage. We brought in so much more than capital.

We injected talent, we used our networks. We worked with the team well for thirteen years. As it grew, we had created a number of for profit funds so we could not just put a few million dollars in for small rounds, but five six million dollars in four, fifty million dollars around. So that that company today Delite has brought light and electricity to over one hundred million people and it's created an ecosystem. We have the technology now. We have the capital.

We have the talent to solve our problems.

I'd love to come back to this idea of moral imagination, but before we do that, there's something I'm not sure how many books you've written, but the most recent one, the manifesto that I just think is fascinating, not just for the work you're doing, but just for anybody out there, which is this notion of just getting started. And the question I have is very much framed around the size of the problems that you face. I mean, it's enormous.

There's you mentioned some of the categories, water, agriculture, electricity. These are huge categories. And the number of people is enormous. And it strikes me that it would. Be easy to just get frozen and not know where to start, and you wrote quite beautifully about the value of just going just getting started. I'd love you to share that lesson with people because I think anyone doing interesting work could benefit from it.

Well, thanks for that is actually one of the later chapters that I wrote, even though it's the beginning, because even as I was writing so many people, not just young or older people, to come to me and say, can you help me find my purpose? And I would think I don't even really understand what you're talking about. The purpose doesn't find people that are sitting around pondering what their purpose is. We find our purpose by living into our purpose, and we actually find many of our answers by moving toward solving a specific problem that happens to be in our purview and in a way that's been core to everything that I've done in my life.

This idea of moving to Rwanda was not a well planned trajectory, to put it mildly. I knew that the traditional banking structures I was in weren't working. I had heard about this microfinance phenomenon and happened to find, but I thought was an opportunity in West Africa. So I moved to pursue that again with no real knowledge, no real understanding by going and by failing. When I first got there, it gave me an understanding of how I might act differently and work differently.

That led me to Rwanda, where at age twenty five I decided that this was a place where you could start a bank for women and luckily did it with a small group of Rwandan women. I didn't really think about the fact that while three years might have felt like a lot of experience in banking, I'm not sure it was enough to start a financial institution, but nobody else was doing it. There was this mix, Patrick, of humility in knowing what I didn't know, but also audacity and that nobody else is doing.

And I'm going to try. And so step by step, I would take a step, sometimes fall down, but I would learn something and I would move forward and before, you know what a path would reveal itself. The other line on purpose that I remember from the book was that it does not reveal itself to those sitting safely in the starting blocks.

I love that concept. Well, as a runner, as two runners and this idea of needing to embrace the uncomfortable and sometimes I think that that lesson of embracing the uncomfortable is best told through stories, not just through concept. And I'm curious if there's a moment that stands out across any part of your history or your career where you felt the most uncomfortable when your pioneering something, you're pushing boundaries against the status quo.

And so I remember so much enthusiasm and, frankly, idealism when I was in Rwanda and we were building this bank going into one of the two restaurants in the entire city of Kigali at the time. And it was full of men, of course. And when I walked in, this Rwanda man said, hey, that's Jacqueline. And everybody suddenly looked at me. He said, Why are you ruining our women? Why is that so important to you?

And it's so took me back, particularly since I was starting this institution not only with a small group of women and women, but the first three women parliamentarians in the country. And I said, well, this isn't my choice. I was invited here to work with Rwandan women who see that it's high time to create an institution where they can also not only take money, but deposit money. And why is that such a terrible thing? What I didn't understand, Patrick, is how early on the innovation curve we actually were.

And in fact, just a few months after we started the bank, one of our founders, who was one of the first women parliamentarians in the country, was killed in a mysterious hit and run accident. And many said concluded that it was connected to a policy she had promoted to abolish bride price. And that was a time that was not just uncomfortable, but quite tragic, because I think it was the first time I viscerally understood the price some people pay in real terms for going up against the status quo.

Incredible story.

The status quo concept, I think gets at my next question, which is about this space between free markets and government. You already gave the great example that I won't forget about so many years after the invention of the light bulb, still this massive swath of the world that doesn't have access to basic electricity. I'd love you to flesh that kind of empty space or that problem space between government action and market action and define that space a little bit. I know that's where you've lived with Acumen.

Tell us what you've learned about why those two aren't sufficient and kind of what that middle might look like.

I used to think that the status quo was this big bad often government lethargy and I have since completely redefined. What is the status quo. If you looked at energy, governments have a vested interest in extending the grid. That's where all the money goes. However, if you look across Africa, where the majority of the UN electrified even today, which is about a billion people still have no access to electricity, about 700 million of them are in Africa.

Ninety five percent of the grids are technically bankrupt. And yet we continue to focus our policy on these oil and coal driven old infrastructure that certainly are only becoming less antifragile in an era of climate change. And they're contributing to climate change, obviously, as well, since their fossil fuel driven. And so to go from there where the average waiting time was always a joke, it still is, was that you would sign up to get your house electrified and you'd have to wait from, they'd say, one to nine years.

But it was essentially nine years to never. You're playing a waiting game to wire a house and connect it to the grid costs about fifteen hundred dollars. And many parts of Africa are very, very difficult to reach within the context of any grid, as was the early days of the United States. When you compare that to off grid, where you can set up a household unit with a 10 to 50 watt solar panel on the roof in twenty minutes, people can now pay because GPS technology and mobile banking, which most people have access to on a daily basis for their electricity, if they don't pay, the solar capital could turn off their unit and collect it.

So you've got huge incentives that align the company and the customers interests and it costs essentially nothing for the hook up costs. Why wouldn't this just be a big part of the solution? But it threatens the kerosene mafias that have for many, many decades charged. Enormous, if not extraordinary amounts for the tiny bits of kerosene that people are paying for on a daily basis, it threatens the diesel mafias. And in a country like Nigeria, I think there are 60 million diesel generators and threatens government because this is about decentralisation.

Suddenly you can see a world where every rooftop is its own energy generator. You've got to find a way to navigate through all of that. The good news is a decade after the guys from Delite and then other companies started, governments and the private sector are seeing the great potential of off grid solar by focusing on solving an African problem, by building largely African companies. The off grid sector has now now accounts for about four hundred thousand jobs, has brought electricity to hundreds of millions of people.

And so it's government seize the power. Certainly governments like Kenya and Rwanda of supporting off grid. And so we've become the largest off grid solar investor for Low-Income Communities in the world now. And it's just been extraordinary to see that we can make this kind of change, given that, as you said five years ago, we had to straggly coeds with this great dream to eradicate proceeds from the households of one point five billion people. And yet they personally have reached about 10 percent of the people.

This idea of the status quo makes me think of your concept of conformity traps. I'm curious what that concept is and how that relates to the status quo.

You're the first person that's actually conflated those and it's so right on. So if the status quo does keep things the way they are, the conformity traps are how in many ways the world conspires to take away our courage so often and how we find ourselves doing the easy thing, even though a part of us knows it's not the right thing, whether it's using excuses like, well, everybody else does it only do this one time. This is what business as usual looks like, working on a really corrupt place on and on and on.

When I really started to think about the idea of it was in the 2008 financial crisis when one of my friends was a hedge fund trader and I was trying to get him to help me understand what was going on with the tertiary and the multiple markets where mortgages were being traded. And I said finally to him, help me understand at the end of the day, who hires the repo man when these mortgages go bust, because you know that there's going to be an enormous default at some point.

And it's like and you don't understand, 90 percent of people could stop paying their mortgages and my investors would still be whole. And I I don't think you're hearing my question. Someone is still hiring somebody to go and take homes away from people. That money is still enabling it now. But you don't understand. I do understand. I don't want you to help me understand. It's not my problem. That was a moment where I thought distance does the moral imagination, that it's not my problem and too far away from the source of the problem.

And when I finally pushed this guy, who I have huge respect for and see what an ethical person he is in his life. But on this issue, I said, at least work with me on this. Don't you think it's a bad thing that all these people are going to lose their homes? And he said, I do think it's a bad thing, but it's not our money that's doing it. Besides Jacklin, if we don't do it, someone else will do it.

To me, that's the conformity trap. And I'm on the advisers of a number of business schools. And in that period of 2008 and each of the business school meetings, there was a reckoning. Did we have something to do with the financial crisis? And I believe that there was no answer. But, yes, that we too often, because we have defined success as money, power or fame, we have a generation of leaders who, after the 2008 financial crisis, could say with clarity and honesty that they hadn't done anything illegal.

But too few of them came forward and really publicly wrangled with what we had done and they had done was right. And that, too, comes to character and the conformity that makes that such an important yet painful and difficult conversation.

This phrase you just used, distance dulls the moral imagination. You mentioned that phrase earlier, too. Could you define. What you mean by moral imagination? Exactly, yeah, when we think about imagination, too many of us use the lens only of our own imagination, even when we're designing problems for people whose lives are completely unlike our own. So using our own imagination to design products for other people just like us works. But if you're designing products and services for people who are poor, who are from marginalized communities, we need another lens.

And the moral imagination starts with empathy, putting ourselves in another person's shoes. But even that's not enough, because empathy without real action reinforces the status quo. It means that you have to move from under putting yourself in their shoes to getting close to immersing or getting proximate to the problem that you're trying to solve and understanding the systems that get in people's way as well as what holds them back or where they might be holding themselves back. The idea of dignity seems really important in all of this, both moral imagination and just in kind of a through line through all of your work, allow me to define that term, because it seems like if we included bringing dignity to others alongside power, money and fame as a measure of success, a lot of great things would happen.

Could you define kind of how you think about dignity and maybe how that's evolved?

For me, dignity really does start with human agency. Do I have a choice? Do I have a say in my life? Do I believe that my efforts will be met by some corollary outcome that I can count on? And one of the great thrills of this work has been to really see dignity at a visceral level in action. Another story of two entrepreneurs seeing a big problem creating a company. Systems change at the heart of it, dignity is in Ethiopia, where up until a few years ago, the average Ethiopian ate less than half a kilo of chicken per year.

And partially that was due to the fact that the government was running all of the big chicken factories or farms, and most of them had very few chickens for lots of reasons that are understandable. And so these two young guys saw an opportunity when the government decided to privatize the chicken farms. Talk about just start. These guys had never held the light in their lives. Big learning curve, Dave Ellis, Joe Shields. And when they first came to agreement, we were like, we think you need to have a few skills before you come to us.

But it took them like four years of massive failures to try to understand a business model that put human beings at the center of it, the smallholder farmer. They gain the insight very quickly that we often look at poor farmers and we think, well, we'll just give them a one day old check. That farmer will raise that chick and then that chick will have to make eggs and life will be good. But the truth is, it's really hard to raise a baby one day old chick until they're forty five to 60 days old, which is when they can start producing eggs.

So they had to turn the model upside down by making up farmers, Patrick, and realizing where they would get leverage. They also had to have the humility of saying that while government probably shouldn't have been managing the big chicken farms, government was more trusted by rural farmers than the private sector so that there was a real role for government to play. And so they created a model whereby they would sell a thousand one day old chicks to people they called agents who were essentially mini entrepreneurs.

You talk about dignity. I met some of these guys who were orphaned, uneducated, but super hungry, and they taught them how to raise those checks. And these guys so cared about those one day old chicks that they would sleep with the chicks at the light for the chicks. The company would make sure they had the right medicines and training, and then those agents would sell forty five to 60 day old chickens to smallholder farmers in batches of two or three, because the average income at the time was three hundred and fifty dollars per year, only about an eight nine year old story.

But today sells to about five million smallholder farmers through its agent network. Some of those agents literally went from almost being beggars to making ten, fifteen thousand dollars per year. The farmers have increased their income by at least 20 percent. The government has credited the company and its own partnership for reducing child malnutrition by 11 percent, and the company pumps about 250 million dollars of liquidity into the nation. That is a model based on dignity. Every player along the value chain has a role, understands their role, is valued in their role.

I am meeting Patrick College graduates with communications degrees in a moment where jobs are so hard to get, who are becoming incredible agents of making a lot of money serving their nation. I actually think there's a model there for the United States, not just around chickens, but around how we solve our toughest problems in ways that provide meaningful jobs for people so that Americans can start seeing ourselves in each other and be part of solving our biggest problems together.

I'm sure you've met so many interesting entrepreneurs, especially outside of the US, tackling some of these problems that we walked through. I'm curious what other skills or styles you see them especially strong at that. Maybe we aren't as strong at here in the US and whether or not some of those things might be portable like a company man, I actually think we have it.

In ourselves, in the United States, in droves, which is the moral imagination, what I sometimes see from entrepreneurs in other countries who understand the deep, deep importance of community is they start by building a business model that insists on including the week and including the poor. A Colombian entrepreneur who wants to build the world's best chocolate factory in Colombia because he understands that in his country, coffee, ironically, is not an indigenous crop. Yet Colombia is known for some of the best coffee in the world.

But cocoa, the beans for chocolate is indigenous. And yet, after 50 years of civil war, you've got a situation where in the post-conflict area where all the great cocoa is built is grown again, no trust, very few skills, no income, no infrastructure. Carlos Velasquez, he used the moral imagination to insist that his company would be built in a way that started by keeping the cocoa growers whole, not only paying a sustainable price, but also providing the skills and building the trust.

I would say that it took Carlos, particularly with the wacko's, which is an indigenous tribe living up in the Sierra Nevada mountains for years to build enough trust that this indigenous community that puts the earth at the center of everything they do would go into a commercial contract with him. And so there's a patience. There's a community, there's an insistence on caring for the vulnerable, not in a charity way, but in a way that actually builds the company.

And I think we have a lot to learn from it. The auto workers are proud to be part of this company because they feel they are exploiting a philosophy that sees human beings not as dominant on the earth, but as stewards of the Earth. A couple of years ago, they did win the best small batch chocolate in the world. You start to see that in a stakeholder model like this, you can create good jobs, high quality products, happy buyers and customers.

And I frankly think that this is the future that corporations that may look at these examples in the short term and think, well, they're so wonderful, but they're hard and they're niche. On the other hand, I don't know a single millennial or even more so the generation coming after that wants to work for a company that isn't sustainable and purpose driven. And increasingly, customers are demanding the same things. So I think that America has a ton to learn from those other qualities, accompaniments, putting the poor first into the business model, moral imagination and a resiliency, a willingness to forgive.

In a funny way, when I look at our criminal justice system, I keep imagining what would it look like if we brought some of that, some of those traits, if we built a system that insisted on individual accountability. But when someone got out of prison, we didn't just give them five dollars and a MetroCard and say, like, good luck, Betty. And so often they walk right into the hands of drug traders that are waiting for them, but rather they are greeted by someone or several people whose job it is to accompany them as they re-enter the community and the job market until they get truly on their feet.

And I would imagine that it will be more efficient, both from a price and time level, more effective and more human.

I'm always blown away by the scope of some of the problems I use. The kerosine example. Before this conversation, I would have been off by at least an order of magnitude if asked how many people still rely on kerosene for light? What are those same big problems today? What are the biggest junkiest, most pervasive problems across the globe that you're most interested in understanding and hopefully tackling?

Well, in terms of just big, I bet you didn't know this. Only one in three people on the planet have access to a toilet. One in three, so that's a big one, because poor sanitation by far and away, it's 80 percent of non chronic disease. So if you care about health, you have to care about sanitation. One in five people have no access to safe drinking water. That is a really hard one to solve. And one of the things we've actually learned is that while we have great insights into how markets can work, we've also seen were too small and markets can also make a mess in delivering safe drinking water.

So we don't do a lot of water investments, although we still have a few primary health care where I believe if you look at the United States, even if we solve and we must, the big hairy problem of getting every American access to basic health care, we won't solve our health problems. And that's why America works in health. But through the lens of the social determinants of health that lead you to finding real solutions to our food systems and food deserts, to our education system, our criminal justice system, to our housing systems.

And they are all connected to one of the reasons KOVR-TV has had such a disproportionate impact on low income people of color in the United States, chronic disease that have underlying conditions that are connected to all of these other systems. Electricity obviously already talked about it. And then agriculture, where 80 percent of the people living in extreme poverty are farmers. And I give you the example of chocolate. It's one hundred billion dollar industry. And yet it rests on the labor of about five million smallholder farming families, 90 percent of whom make less than two dollars a day.

So we have agricultural value chains that are ascribing so little value to the actual producers that in the case of chocolate and coffee, particularly an overwhelming number of them cannot even cover their costs of production. That is a situation that not only makes no sense and is again unjust, but it's unsustainable. And so it should be no surprise to us as a world that the average farmer today is fifty seven years old and that their children do not want to be farmers.

So if we want to continue to have a food supply chain, we have to figure this one out. And automation can do some of it, but it ain't going to do all of it. There's enormous markets here, and one of the things that I just think is so wild is investors, let's say here in the US, spend enormous amounts of time and energy just trying to find the next big market that they can invest into.

And here we got a third of the globe, a fifth of the globe, enormous numbers of people and therefore enormous markets that have obvious needs. So we understand the product and we understand the market size, and yet it persists.

I still struggle a little bit to understand what is the breakdown of why purely greedy investors and capitalists can't go in and address these problems because it sounds as though they can build enormous businesses addressing these solutions. Are there other impediments that we haven't talked about yet and we've talked about several that you think the audience would be interested in hearing as to why some of these problems don't get solved through the traditional sort of selfish capitalist lens. Selfish, I mean, in the maximizing shareholder value sense.

Yeah, I mean, it's a complex question that you're asking specifically around these problems, because very profit oriented investors are investing in the markets, but typically for big infrastructure, private equity is gone in in a big way, coming out of the Middle East, China and the US to buy big swaths of land in Africa, essentially with this idea that we can grow big commercial farms to feed us to export it out of Africa. That's part of the complication, is that actually solving problems for the poor?

It is for the poor that makes this complicated? Not in the long term, Patrick, but in the short term, so that in the cases of primary health care, that is a very thorny, sticky issue and will require partnership with government. It is the only way we will solve problems for the poor. And different investors have taken me on. Well, why is that? If you think about it, it shouldn't be that complicated. When people make a dollar a day and their child has malaria or some other disease, there are often cases and I have seen them and known children where that mother doesn't have that 10 cents that day and that child dies.

We don't want to live in that world. None of us do. But the markets alone are not the solution. So there are market opportunities that work with government and other third party payers to ensure that we get primary health care to everybody. And I believe that that is something that we have to do so much better as a world. But we are having too many of the wrong conversations where we bifurcate that it's either the market's domain or its governments.

Rather than looking at those roles for government where markets can flourish or where markets may not have a role, that's one answer to when it comes to off grid solar. We need this is a market that we could actually solve the problem with single digit billions, not hundreds of billions. And yet people think of Africa as not investable, except, as I said, at the very large, high infrastructure level, which I find ironic because that's often where you see these big bankrupt grids.

In fact, Saffy, I have great hopes as I look at the growth of our companies. Once the patient capital has been used in the early stages, it can really work. The other thing that we're starting to do differently again, remember, our target market are people who make just a few dollars a day is we've got much more sophisticated over the last 20 years at creating blended capital models. And what do I mean by that is to start with the problem that you're trying to solve, then determine the right kind of capital and it's usually different pools of capital to solve that problem where we need all sorts of investors.

So just staying in that off grid electricity space in the early years of daylight? No, not including us. We didn't understand the market. We didn't understand the customer. There was no financing. There was no infrastructure on and on and on. Hard pressed to find any traditional investors that would go take a bet. That is where our patient capital, that is where the role of philanthropy was so powerful. Even if we use that philanthropy through an investment model because we could accompany the company as it grew and then help bring in more traditional investors.

Now it's at a place where we could grow the next investment stream into our Safarov grid for profit fund for East Africa, which over the last three years has brought 50 million people electricity. That fund then has investors the. That include the more socially, more traditionally socially impact oriented funds, but also AXA and others. I think this is where the world must go if we are to solve our biggest problems, that we have to get away from thinking there are no trade offs, but rather we have a chance on this planet in this generation to solve the biggest problems that we face as a world.

We see what it looks like in this global pandemic when we just don't solve them and it ain't pretty. And that requires moving away from standing in our corner that there is one way to do business and it's only maximizing shareholder returns or it's having no trust of business at all and only looking at government. But it's having the dexterity to hold these two ideas. And that's when we talk about using markets without being controlled by them to solve our problems.

I always, as I'm having these conversations, make mental notes of like the concepts that I'll remember. And there's so many in this one, the ideas of dignity that we explored, of moral imagination, of getting started, of the shortfalls, I guess, of market solutions to everything. So many great ideas to take away and chew on and learn more about. My closing question for everybody is the same, which is to ask for the kindest thing that anyone's ever done for you.

My husband said to me last night, you're never more alive and on fire than when you're sitting in a slum somewhere or with a small holder. And as a result and the reason for that is I've seen people who have nothing over and over want to give me everything. And I think about how little I get back. I could give you a thousand stories, but the one that just came to mind with a drip irrigation company, we would sell tiny bits of drip irrigation to small, poor farmers so that over time, as the drip irrigation improve their productivity, they could buy another piece of the drip irrigation and go from a quarter of an acre to half and so on and so on.

And it was extraordinary. And I went to go visit this one farming family that had succeeded, and they lived in a lean to tent, if you will. Just imagine the two sticks with the piece of tarp that flowed over. And I kept thinking, oh, my God, in the mountains. What did these people do? I mean, just that poor. But next to the tent was a concrete foundation for the house that they would build and they could only afford the foundation so far from the drip irrigation that they had invested in.

And we're building new lives for themselves. But they were that poor and the day was hot. It was like one hundred and twenty one degrees. So I'm not exaggerating, feeling hot. So imagine just living in a half tent. I had this group with me and we didn't bring any gifts. Everybody was really cranky and didn't really want to be there, but I felt obligated to be there and was talking to the woman and she was sharing her dreams.

And you could see the house that she was going to build in her eyes as she spoke about it. And then she said, But you can't leave yet because I spent the whole morning cooking for you. And I was like, oh, please. And sure enough, we'd go into this lean to tent or as many of us could fit in it. There were four of us. And she prepared this lavish meal for us. And we sat in the ground and I thought.

Here I am with truly someone who you would look at and think she has nothing in the world, but she won't let us leave until she treats us like gifts. We talk about dignity, Patrick, and how much there is to learn from it. I guess it's that kind of story. And the food was delicious to die for. Oh, you tell that kind of story and the fact that I have a thousand like that. And I think that is really what brought me in writing the book to think not only about what is success and who are the most successful people, but does it have to be the richest, the most powerful, the most famous, or might it be those who do the most to release other people's energy and dignity in the world?

And what if we moved away from a golden rule of do unto others as you would have them do unto yourself to one that asked each of us to follow a simple metric, give more to the world than you take as individuals, as families, as companies, as investors. When I first started trying to apply that to Acumen, can you really invest and give more than you extract? And the answer is yes. If you take that approach of doing everything in your power to make that person succeed, particularly if that person is driven by purpose to help other people succeed, kind of becomes a radical generosity that keeps coming back to you.

Kindness begetting kindness. But it's not just about being kind. It's also about being human and about sharing this earth with each other. Well, Jacqueline, I've so enjoyed our conversation today, I'm deeply appreciative of your time and all the lessons you've shared with me and with the audience. Thank you.

Thank you, Patrick. It's really been an honor and I really appreciate it.

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