INSPIRED IMPACT post headerINSPIRED IMPACT™ features purpose-driven leaders and social entrepreneurs who are making a meaningful impact in their communities, industries, and around the world.


 

Sunny VanderbeckSunny Vanderbeck is the managing partner of Satori Capital headquartered in Dallas, TX. Follow them on LinkedIn and learn more at satoricapital.com.

 

TELL US, WHO ARE YOU AND WHAT DO YOU DO?

I’m Sunny Vanderbeck and I am co-founder and managing partner of Satori Capital. We’re a multi-strategy investment business founded on the principles of conscious capitalism. We invest in two ways – one is through private equity stage investing where we invest in profitable companies that typically have 75 to 250 employees or $25-250 million in revenue. We can either be a minority investor or a majority investor; we can buy a little bit or buy a lot. Sometimes the capital is used for growth, sometimes it’s used for liquidity for other investors or founders. Our other business invests in funds that are typically alternative funds like credit, venture, real estate, or hedge funds. In some cases, it’ll invest in those funds solely as an investor in the fund, and in other cases, it invests in the management company that leads the funds and helps those funds grow and be bigger versions of themselves.

There are three organizing principles around what we’re doing. In no particular order, the first is the operator’s advantage. Both my co-founder, Randy, and I were founders in operating companies before we started Satori so the leadership teams have actually done the work of the companies we’re investing in. If we invest in a company that has $50 million in revenue and hopes and dreams of having $150 million in revenue, we have the people on the team who have done that before. And, the same idea is true for funds…if we invest in a fund that has $12 million in capital and hopes and dreams of having $1 billion in capital, we have the people on the team who have done that before. We’re able to make different decisions and we’re actually able to help and make a difference.

The second principle is time horizon. Most investment funds are built with a well-defined time horizon which creates some challenges. In particular, the structure of the funds causes most people to be short-term focused. Even if they want to be focused on the longterm, they are forced to make short-term decisions because they have to sell their investment. You can only be so enlightened if you know you’re going to sell the company in 18 months. We didn’t want to have that problem. We understand that the way to create really extraordinary outcomes is to not be in a hurry and to make decisions as though you are always going to be an owner or an investor. The example I use is what if you were the largest employer in a small town, your family name is on the door, and you knew you could never sell the company? What decisions would you make? We try to have that perspective both when we’re making new investments and when we’re trying to help them be successful. We’re not looking to go anywhere. We’re not looking around for who could we could sell it to. The plan is really simple – to make great businesses and great investment funds. If we do that, the economics work out really well.

The third principle is conscious capitalism which we define as profit not being the thing to pursue in and of itself. Profit is a reflection of creating value for customers, employees, suppliers, your community, and so forth; it’s a very stakeholder-centered mindset. If you have a company, assuming you’ve got a good business model and your customers are happy and your employees are happy and your suppliers are happy, there’s a pretty good chance your investors are happy, too. We believe that if we pursue greatness and extraordinary outcomes for our stakeholders, we will get greatness and extraordinary outcomes for the investor stakeholder.

 

HOW DID YOU GET HERE?

I started college when I was 16 and went for a year and didn’t like it. I then joined the military and became a ranger in the 2nd Ranger Battalion. It was a lot of fun for four years and that was plenty. When I got out, I went back to school and then got a job at Microsoft in 1994. In 1996, I saw an opportunity around this crazy thing called the internet and thought, “Someday people are going to buy stuff on their computers.” Everybody thought we were crazy, but it turns out that’s what happened. We started a company, I was the CEO and we went public in 1999. I continued as CEO until we sold it in early 2002, then bought it back in early 2003 and ran it as a private company for another four years before I sold it for the second time in early 2007. I then started Satori with Randy Eisenman at the beginning of 2008.

Randy, Satori’s other co-founder, and I had known each other for years, and we started, for lack of a better term, business dating. We met each other but we’re totally different people, we’re not at all alike. But there was something there. We were both CEOs at the time but said, “Hey, let’s spend some more time together. I like this guy. I don’t know what may come of it, but let’s just spend time together.” We would spend 2-3 hours a week together and did that for years. Out of those conversations came this awareness that there were problems in the capital market from our perspectives as entrepreneurs and recipients of capital, so we ultimately decided to stop complaining about it and go fix it. That was the genesis of Satori – we wanted to build a firm with the capital we wish we could have accessed and a partner we wished we had had.

 

WHAT DO YOU STAND FOR? WHY IS THIS WORK IMPORTANT TO YOU?

Our purpose is to create, fund, and inspire businesses that elevate humanity. Here’s what we’re really trying to do – in the world that we want to see someday, the things that make us very different now will be how everyone does it. The day that I go to a meeting with a potential investor or a potential recipient of capital and tell our story and they say, “That sounds just like everybody else,” that’s the day that we know we won.

Winning means that all investors care about longterm time horizons, stakeholders, and an investment manager’s ability to make an impact on the companies they invest with. We’re not measuring winning by how big we get, but by how much we get copied and I hope they all copy us because that’s what we’re trying to get others to do.

 

WHAT IMPACT ARE YOU MAKING?

It’s easy to talk about impact in businesses whose products have a direct impact. One of our portfolio companies recycles more plastic bottles every year to go into their product than Nike does. We’re appreciative that they do that but our big idea around the impact stuff is healthy, conscious companies. Imagine a future where every company was trying to be a “best place to work” and every company was extraordinarily customer-focused and had happy customers and thought about the impacts on its community when it made decisions. If you’re a company that makes rivets, no matter what happens, you’re going to have to make rivets. But what does an impact rivet manufacturer look like? It looks like a “best place to work” company with loyal employees, happy customers, and does well in its community.

Our idea is that the way we have impact is to make companies that are extraordinary because their peers in the industry will take notice and start to change their behaviors as well. We believe business is an extraordinarily constructive force in the world. Most of the things that have improved in our life in the last 500 years have come from capitalism. Let’s help capitalism be the best version of itself. The way we have impact is to have companies that are such awesome places to work that people drag their families to work there, or are so good with their customers that their customers are raving fans and tell everybody. We believe a lot of the problems we talk about and the things we’re trying to solve for go away if all companies run that way.

It’s a little different flavor than a lot of the impact stories which tend to be product-focused. Where we’re trying to have our impact is around the question “What does it mean to have a great company, and how does that work?” because most of us have jobs, and so how different is our world if 80% of the workforce loved their job? What would it be like just in terms of being a human? It would be transformative.

We’re going after that dimension of impact with the belief that great businesses create a huge wake in terms of their impact. We’ve seen it happen where a company that’s doing all this work around its stakeholders and is trying to be a good corporate citizen and all of a sudden their suppliers start wanting to know more about what they’re doing and how they’re engaging their employees. It’s a bit of an infectious thing. One of the cool things about knowledge is you can’t unlearn something. These suppliers might hear about something and think, “Well, that’s interesting. Maybe I could do that.” Because of the very existence these companies, the world is better off. That’s what we’re trying to do, and that’s where we’re trying to have an impact.

 

WHAT (OR WHO) INSPIRES YOU TO DO THIS WORK?

One thing that’s inspired me throughout this journey is that which I didn’t expect. I did not expect us to get out there into the world and to find this happening everywhere. It’s all over the place. You don’t see it much in big companies, and you don’t see it much in companies in that are in the news, but you go to a small town in middle America and you talk to the owners or family or founder of a company about what’s important to them and their story, and we find unconscious conscious capitalists everywhere.

There are great things happening everywhere, all around us, in every state. In the middle of nowhere, in the places you would least expect it there are thoughtful, longterm, conscious, stakeholder-oriented decisions being made every day. These companies don’t have a department for that. They just do it because it’s the right thing to do. I didn’t expect that. I expected this way of thinking and of doing business to be rarer than it turned out to be, which has been very exciting.

Here’s an example. We talked with a distribution company that has a lot of hourly workers in their warehouse. One of the employees was a refugee from a war-torn country and hadn’t been back home in 15 or 20 years. This guy had saved up and saved up to be able to go back home and see the people and family who he left behind, but he was really nervous because he was going to take a couple of weeks off. Often, in a warehouse kind of job, you don’t take two consecutive weeks off and he was really nervous about losing his job. The CEO got wind of this and called him into her office. You can imagine this poor guy shaking in his boots. She asked him to sit down and said, “Hey, I understand you’re going home to see your family and that you’re going to be out for a couple of weeks.” He nervously confirmed. She reached in her drawer, pulled out an envelope, hands him his full pay for the two weeks he was going to be gone and says, “Enjoy your trip. Enjoy your family. Can’t wait to see you when you’re back.”

What’s interesting is downstream from that, what do you see? When you go into that warehouse, you see people who are still hustling at 5:05 p.m. because they’ve got an order for a customer they want to get out the door. In some companies work pretty much halts at 4:30 p.m. and everybody’s staring at the clock just waiting to get out of there. The reciprocity that happens in these stories is extraordinary, where if the company has the team member’s back that actually works both ways. The employees are focused on getting good outcomes for their customers and for the company, and they’re not worried about what time it is.

But when your time horizon is only 90 days, and your investors are separated from the people who lead the business day-to-day by electronic trading systems and own a piece of paper that’s a financial instrument, they don’t think of themselves as part owners of a business, making shortsightedness an almost inevitable outcome. I think it’s a structural problem that’s largely created by the distance between the leadership of a company and the owners of the company.

 

WHAT CHALLENGES ARE YOU FACING?

We don’t have enough time to do all the things that we want to do. It’s the classic entrepreneurial challenge where no matter how good things get because we’re entrepreneurs we always see how things might be better or different. We always run out of time for the things that we want to accomplish, and at the same time, things never go as fast as you want them to.

For example, I would like all of our companies to be a “best place to work.” I want them all to win an actual award for being a best place to work. I wanted that to happen inside of a year but it was just not realistic, for a bunch of different reasons. I feel challenged by that because I wanted it to go faster. We’ll get there, but I’d like it to happen faster.

Another challenge for us is the fact that we’re different in ways that we think are extraordinarily important. But, for a large part of the market, the fact that we’re different is scary. There are certain investors who absolutely love our philosophy that if we’re going to sell our ownership in a company, we’ll do it when the time is right and it’s the right buyer, right situation, all those things. For the investors who like that, they really, really like that. But for a lot of the investors, in particular in pension funds and endowments, which is where a lot of the capital comes from for private equity and for alternatives, they aren’t allowed to make that investment because they’re so used to hearing the standard, “You have to sell it at five years,” that we’re too different.

 

WHAT’S ONE THING YOU WANT PEOPLE TO KNOW ABOUT THE WORK YOU’RE DOING?

The view that capitalism is just an engine for money has only come about in the last 30-35 years. Prior to that, that’s not how it worked at all; it was very different. These last three decades have been this sort of temporary insanity in capitalism. We don’t need to get rid of capitalism. We just need a return to our more purpose, stakeholder, and impact-focused roots.

There are a lot of different ways to express purpose and impact and the desire for the world to be different than it is. I believe the various viewpoints around purpose, impact, and a focus on stakeholders all have the same underlying desire and the same underlying need. We’re all solving for the same stuff. If your thing is conscious capitalism because the way they talk about this lights you up, great. If your thing is B Corp and B Lab, great. It’s the same stuff. These are different expressions of the same fundamental need to have meaning in work and a purpose for companies beyond being an ATM. Acknowledge that and appreciate that they’re just different expressions of the same need. If you’re key messaging is around reducing supply chain waste in food, cool. Remember that your brother, your sister, your cousin who is focused instead on employee experience is actually solving the same thing with the same energy. Different industries, different priorities, different personal passions, but we’re actually all trying to solve the same problems. We want to see the world run in a more long-term, conscious, stakeholder-oriented way where people make decisions and they think about others, not just themselves.

 

DO YOU HAVE A FAVORITE QUOTE OR WORDS OF INSPIRATION TO SHARE?

The one I’m staring at on the wall of our conference room is the Conscious Capitalism credo:

“We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.”

 

HOW CAN OTHERS SUPPORT YOU OR YOUR CAUSE?

There are two things that come to mind. The first is to go do the thing you want to do. Go live your purpose. Go run your company in a way that matters to you and that brings meaning to the world. That’s ultimately what we’re trying to do and to inspire as a firm.

The second one would be to make introductions. The vast majority of investments we make come from somebody who knows somebody who knows us. Unlike how other investments get made with an intermediary, such as an investment banker, who shops the deal to 200 people and the highest bidder wins, our investments come from somebody who has a sense of what we do and has a friend, colleague, cousin, or brother who is trying to figure out where to go or what to do next. They’re wondering if they should sell the company, get a partner, make an acquisition, etc. The introductions to those leaders are very meaningful to us as an organization because we don’t participate in the transactional bidding process. Instead, we focus on getting to know each other and learning about what we both care about to see if our values align and if we’re aligned on vision and so forth. Connections and introductions, direct or secondhand, to people who would be excited about meeting us make a huge difference. We see about 1,000 investment opportunities a year in our private equity business. We will do two or three. If someone makes an introduction for us, that could be a 20-year relationship and one of two or three investments we make in a whole year. Introductions really matter a lot to us; they have a huge impact on our world and our ability to fulfill our purpose.

 


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