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.


Tripp Baird

Tripp Baird is the Managing Partner of The Builders Fund headquartered in San Francisco. Follow them on Twitter and LinkedIn and learn more at thebuildersfund.com.

 

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

My name is Tripp Baird. I am the managing partner and co-founder of The Builders Fund. Builders is a growth-stage private equity fund investing with an impact lens at the intersection of purpose-driven businesses and the disruption created by large social and environmental challenges; generally, we invest between $5 and $20 million into companies with $10 to $100 million of revenues. Thematically we focus on sustainable food and agriculture, resource efficiency/climate solutions, health and wellness, and human elevation. We think our arena is an underserved segment of the impact investment market, where most capital has historically flowed to emerging markets, venture and into real assets. We’re one of the few authentically committed impact funds investing at this size and stage.

 

HOW DID YOU GET HERE?

Grew up outside of Boston. Harvard for school with a dual degree in Psychology and Visual and Environmental Studies. I was a management consultant at Bain early in my career; went from there into a mid-market buyout firm called North Castle Partners investing in health and wellness-related consumer companies. Worked on deals like Equinox Fitness Clubs and Naked Juice in the early days of super-premium juice. I was part of a two-man west coast team there and then spun out in 2005 to launch a merchant bank focused on healthy, active and sustainable living called PCG and spent 7.5 years building that with partners and what ultimately became a 25 person team. We did about $1 billion of transactions on the banking side and had three funds with $200 million of assets under management. We wove in more of a Millennial impact (vs. Baby Boom at NCP) and an increasing focus on climate change and resource efficiency along with the health and wellness focus that we brought from North Castle. 

My personal journey had been from weaving my career with personal interest (in health/wellness) toward a desire to increase the positive impact of my work/life. With PCG I thought we could do more by redirecting capital toward businesses doing good in the world via the advisory side of our business, but it was also frustrating not being more “in the trenches” with the teams building those platforms. PCG sold the bank to Piper Jaffray in 2013 and I was ready to move on from banking – had been observing purpose-driven brands succeeding and wanted to better understand that trend. I had spent a fair amount of time with passionate entrepreneurs trying to fix societal problems with their business and it was also clear to me that those kinds of businesses were winning in the marketplace. I also saw many early entrants into what became known as the impact investing space with good intentions but lacking the rigor of the traditional investment approach. I saw significant and intractable social and environmental challenges growing. I saw a next generation coming into the workforce yearning for more meaning in their lives and seeking out jobs that could better align their values with their work. And I, like most of us, wanted to spend my precious time in this life doing work I cared about and that left the world better than I found it – to more fully integrate the Buddhist notion of “right livelihood” into my life. So I set out to launch an impact fund to, in essence, try to help change the system. The observation was that capitalism at its core, and private equity as part of that, has been part of the problem, extracting wealth over the short term for the few, with the focus almost exclusively on shareholder profits.

My observation from working with these great and passionate management teams over my career was that there are lots of great people who are doing it right, with a sense of system’s responsibility across the corporate ecosystem, to multiple stakeholders and creating shared value across that corporate ecosystem. And that in this time and place with rising awareness of climate change and other large societal problems, shifting consumer demographic, and ubiquitous access information via emerging technologies and the internet, those kinds of companies have an outsized opportunity to generate value.

And so from a purely investment thesis perspective, those kinds of companies are, especially at these emerging growth stages, a great place to invest. That ultimately became the Builders Fund that you see manifested today.

 

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

Private Equity with Purpose! What motivates us every day is that we think capitalism, as it was, is broken and contributing to in many ways to the breaking of the world. We’ve got a crisis on the global warming side. We’re facing rising income inequality, an obesity and chronic-disease crisis in the United States, a fractured political system, and serious social justice issues. So there’s a need to find a better way.

At the same time, I think history shows very clearly that alternatives to the system have not worked either. Meanwhile, the government is – to put it mildly – pretty dysfunctional these days; and non-profits can’t do this alone. So there’s a belief on our side that capitalism, while it’s been part of the problem if it is harnessed properly, it’s actually a tremendous tool for positive change and has and continues to do great things around the world to lift people up. If it’s harnessed correctly the flywheel of profit can and should be one of the primary tools that we use to fix the mistakes that we’ve made as a species.

So what motivates us is that we have a strong belief that there’s a better way of doing business. We want to be a catalyst to help demonstrate that this “better way of business” can generate highly attractive returns for investors. And in doing so, through that success, we want to help change the system toward one which is systems aware and systems responsible, human-centric, and generates long term shared value across the corporate ecosystem instead of extracting short term profit for shareholders in ways that destroy the planet and create inequality.

 

WHAT IMPACT ARE YOU MAKING?

The most concrete way to talk about our impact would be to look at some of the investments of our first fund, which is now fully invested. One of my favorite examples is a business called Traditional Medicinals (“TM”), which is the fourth largest bagged-tea company in the United States. It’s the largest organic and fair trade tea brand in the US and what makes them unique, aside from their organic medicinal teas which provide great inexpensive functional medicines to people, is really how they run their business. The impact that business has is really through its 40-country supply chain where they source pharmacopoeial or drug-quality herbs, fair trade and organic, largely from emerging economies. What most people don’t realize is that over 80% of the medicines we consume on the planet are still derived directly from plants, plant compounds, and fungi, and of those, 80% are not grown agriculturally, they are grown and collected in the wild, largely in emerging economies and largely by women. Think about that for a minute. Essentially, this entire multi-billion dollar drug industry around the world is largely supported by these indigenous women in emerging economies who are picking plants from the wild. And many of those plants are threatened today by climate change, unsustainable development, and social and economic instability. So Traditional Medicinals invests in sustainability, community development, and economic empowerment into those communities. They invest in sustainable agriculture through their P&L with fair trade and organic premiums and into community development and resilience into those communities through an associated and fully-funded foundation.

 

TM, which is now 46-years-old, was co-founded by an herbalist and an activist and has now become one of the fastest-growing tea companies in the country. But its real core competency is investing in shared value with the communities that are picking and growing the herbs that get used in these highly efficacious, high-quality teas. One of their projects is in the Rajasthan desert range which is the only place in the world that senna is grown, which is the active ingredient in every laxative in on the planet. They’re building water catchment systems and schools and providing women with bicycles so they can get to school amongst other projects. By helping that community, educating and empowering women, providing tap water facilities so they’re not walking four hours to get water, they build more community resilience, teach them better agricultural practices such that the active ingredient in senna (sennocyde) is actually concentrated through better practices to be three times more efficacious. Their communities win and the company wins.

 

That example ranges across most of the relevant geographies TM is involved with. The company has supported dental clinics in Bosnia, panda protection in China, to name two more; and solar energy being produced on their plant in northern California makes their product 100% renewable energy produced. Traditional Medicinals is a really wonderful example of a business that takes systems responsibility seriously and is on a journey of continuous improvement across the operation to build a long-term shared value-generating platform.

 

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

First and foremost, I’d say my peers in the impact investment community inspire me every day. Also, all these entrepreneurs and CEO’s on the operating side who are building companies to make an impact. They’re taking the time to think about those systems that your drug procurement officer, in the prior example, isn’t thinking about, or that you and I are not thinking about when we pick up our groceries from the store, where it’s coming from and how it’s produced. I’d also add my two sons, who are finding their way in the world and at the end of the day it’s for them and the world we’re leaving them that I’m working.

 

WHAT’S YOUR VISION, YOUR BIG DREAM FOR THE IMPACT YOU WANT TO MAKE?

The fundamental goal is that through Builders’ success we want to prove to the trillion-dollar financial services community that there’s a different way of doing business. I think most people are not bad people. They’re not out to destroy the planet, oppress minorities, etc. Most of us are just not paying attention. I think this notion of systems awareness and system responsibility is the next chapter for humanity. That and a recognition through that way of thinking that GDP is not the measurement of success! That accumulation will not bring us happiness! Builders, through our efforts, hope to help grow great businesses, support management teams to help them be successful and have a positive impact across their entire stakeholder base and through that activity, have real meaningful impact. But ultimately, through the collection of those companies’ successes, to show others that there’s a better way of using our time and our capital.

 

WHAT CHALLENGES ARE YOU FACING?

“There’s only so much time in the day” is the first that comes to mind. That there’s certainly no shortage of great opportunity. We’ve made a lot of good progress thus far and we’re excited about our next fund. I think our biggest challenge right now is probably bandwidth; bandwidth and scale. I’m so excited to build our team and expand our bandwidth from there.

 

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

Within the industry, I think many of us in the impact community tend to focus only on the impacts of a product or service– meaning “what the impact of the business model has”. That’s fundamentally important. We’re also focused on investing in businesses whose fundamental business model provides positive social or environmental benefit so that as we scale the business, we’re scaling that positive impact. But there’s an entire side of business operations that I think many folks are not thinking about as much – the impacts that you have through your operations, through your culture, through your employee base, through your banking relationships, through your investor relationships, through your communities, and at every node of that proverbial corporate ecosystem. There’s an opportunity to have a positive impact, create shared value, and improve your so-called ESG, (environmental social governance) factors. That’s something that we spend a lot of time thinking about and we urge others to do the same because it’s so often less of a focus. I’ll also take a moment to call out our friends at B Labs / B Corporations, who we leverage in that effort through their certification and assessment tools. Our goal is that every one of our investments can become certified B Corporations.

 

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

“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks but rather teach them to long for the endless immensity of the sea.” by Antoine de Saint-Exupery, the author of The Little Prince. I think what’s profound about that is the power of purpose that I’ve seen manifest in business and its ability to, through values-alignment, engender trust and commitment amongst employees and customers in ways that can really generate positive value for all the folks involved. If you are marching a group of folks along to collect a paycheck, to generate profit or just deliver the best product or service available you’re not going to create much values alignment. But if you can build a community around something greater, “the endless immensity of the sea” so to speak, and give folks a shared purpose to align around, magic happens. You can create that alignment from your day-one employee through multiple stakeholders all the way out through your brand and into the marketplace. That is ultimately, I think, the best manifestation of a corporation.

 

HOW CAN OTHERS SUPPORT YOU OR YOUR CAUSE?

Be in touch. Create community, shared resources, shared best practices, shared deal flow. If you want to invest the way we are investing, give us a shout. This is the second or third inning and there’s such a long way to go. I think the impact investing community needs to come together to grow the pool, grow the size of the proverbial tent…. and if you’re just starting out – dream big! Just because something is the way it is, doesn’t mean it has to stay that way.

 


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