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Jacqueline Novogratz - Building Acumen & How to (Actually) Change the World | The Tim Ferriss Show

Tim FerrissTim Ferriss
Howto & Style4 min read119 min video
May 6, 2021|27,405 views|305|29
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TL;DR

Jacqueline Novogratz on changing the world with patient capital, character, and moral imagination.

Key Insights

1

Character is the most crucial ingredient for entrepreneurial success, even more than business ideas.

2

Impact investing involves patient capital, often using philanthropic funds to support social enterprises in areas where markets fail.

3

Moral imagination is key to understanding and solving complex problems by immersing oneself in others' perspectives.

4

Acumen, founded by Novogratz, invests in entrepreneurs, builds a community for social change, and measures impact through lean data.

5

True change requires addressing systemic issues and fostering dignity, not just providing income or jobs.

6

Personal growth and courage are cultivated through embracing challenges, speaking truth, and committing to something larger than oneself.

FROM BANKING TO BRAZIL: EMBRACING A GLOBAL CALLING

Jacqueline Novogratz's journey began unexpectedly in corporate banking, a path she initially pursued due to parental influence and a desire to explore the world. Her role in credit audit at Chase Manhattan Bank, which involved extensive international travel, exposed her to diverse economic and political landscapes. This experience, coupled with her observations of vibrant communities often excluded by traditional banking, ignited a desire to use financial tools for social good. A pivotal moment occurred when she realized the bank's rigid structure prevented her from implementing her ideas for serving low-income populations, setting her on a path to disrupt systems from the outside.

FROM CONFRONTATION TO COLLABORATION: NAVIGATING FAILURE IN WEST AFRICA

Novogratz's early attempts to bring banking tools to West Africa were met with intense resistance and even threats, leading to a profound sense of failure. The experience humbled her, teaching that well-intentioned interventions can be met with suspicion when lacking local understanding and partnership. She learned the critical lesson that simply parachuting in with external capital and ideas is ineffective. This period of hardship, including illness and isolation, ultimately fostered a deeper humility and courage, preparing her for more collaborative and effective approaches to social change.

THE BIRTH OF ACUMEN: PATIENT CAPITAL, DIGNITY, AND MORAL IMAGINATION

Driven by the Rwandan genocide and a redefinition of poverty as the absence of dignity, Novogratz founded Acumen in 2001. Acumen's core philosophy centers on 'patient capital' – long-term, philanthropic investments in entrepreneurs tackling critical issues like healthcare, education, and energy in markets where traditional capital fears to tread. This approach emphasizes building enduring institutions and fostering human capability. The name 'Acumen' itself reflects the need for insight and perspective in addressing complex global challenges, moving beyond mere goodwill to strategic, accountable action.

ACUMEN'S MULTIFACETED APPROACH: INVESTING, LEARNING, AND MEASURING IMPACT

Acumen operates through three key pillars. First, it invests patient capital and provides 'social capital'—networks, knowledge, and talent—to entrepreneurs. Second, it builds a community for social change through Acumen Academy, offering tools and frameworks for aspiring leaders. Third, Acumen emphasizes measuring what matters, leading to the spin-off of 60 Decibels, an impact analytics firm that prioritizes the voices of beneficiaries. This holistic strategy aims to create systemic change by fostering businesses that serve all stakeholders, not just shareholders.

LEAN DATA AND THE POWER OF LISTENING: MEASURING TRUE IMPACT

The 'Lean Data' approach, pioneered by 60 Decibels, revolutionizes impact measurement by focusing on the perspectives of those served. Instead of relying solely on investor assumptions, it uses accessible technology like SMS to gather direct feedback from customers. This allows organizations to understand the real-world impact of their products and services on dignity, health, education, and income. This method provides crucial insights for entrepreneurs to improve their models and for investors to allocate capital more effectively, ensuring that interventions genuinely serve the poor.

EMBRACING COURAGE, COMMITMENT, AND MORAL COMPASS

Novogratz stresses that meaningful change requires more than just good intentions; it demands courage, commitment, and a strong moral compass. She advocates for 'immersion'—deep engagement with problems and people—and learning from leaders like John Gardner, who embodied integrity and principled action. For those aspiring to make a difference, Novogratz advises starting with problems, not predefined passions, taking small steps, and apprenticing under mentors. The key is to commit to something larger than oneself, which ultimately leads to greater freedom and impact.

MOVING BEYOND CHARITY: HOLISTIC INVESTING AND SYSTEMIC CHANGE

The conversation also delves into the limitations of traditional charity and the broken model of capitalism that often bifurcates wealth creation from social responsibility. Novogratz encourages individual investors and institutions to think holistically, integrating impact considerations across their entire portfolios. This includes supporting entrepreneurs like Sam Polk of Every Table, who is building scalable businesses that foster community and economic opportunity. The ultimate goal is to shift from a model of extraction to one of genuine investment in human capability, dignity, and a sustainable future.

Common Questions

Jacqueline grew up in a noisy, loving, chaotic house with seven siblings. Her parents, especially her myth-making mother, instilled an entrepreneurial spirit due to financial constraints and a strong sense of family identity. The Catholic immigrant background reinforced the idea that 'to whom much is given, much is expected,' fostering a blend of tribe-like belonging and individual wildness.

Topics

Mentioned in this video

People
Peter Attia

A popular podcast guest (on Tim Ferriss's show) and investor in Magic Spoon, known for consuming large quantities of the cereal without a significant glycemic response.

Muhammad Yunus

The founder of Grameen Bank and a hero to Jacqueline Novogratz, whose work in microfinance inspired her to pursue similar initiatives.

John Gardner

An extraordinary mentor Jacqueline Novogratz met at Stanford Business School, who shaped her life by focusing her on leadership and the importance of integrity, serving as a Republican in Lyndon Johnson's cabinet and later founding Common Cause.

Tilly Olsen

Mentioned by Jacqueline Novogratz for her quote about living a life of immersion, which relates to the concept of moral imagination.

Jacqueline Novogratz

The founder and CEO of Acumen, a pioneer in impact investing, and author of 'The Blue Sweater' and 'Manifesto for a Moral Revolution.'

Mike Novogratz

Jacqueline Novogratz's brother and a past guest on Tim Ferriss's podcast, who shares a similar driven nature and has also achieved global scale success.

Jim Collins

A friend who Jacqueline Novogratz paraphrased regarding the idea that keeping all options open can lead to merely having a bunch of options rather than committed purpose.

Chinua Achebe

Author of 'Things Fall Apart,' a book mentioned by Jacqueline Novogratz as influential.

Ryan Holiday

A past podcast guest and a friend of Tim Ferriss, who invested in Magic Spoon cereal.

Tony Triciano

The CEO of Chase Manhattan Bank who gave Jacqueline Novogratz a significant opportunity, despite her unconventional fit, seeing her scrappy background as a positive.

Sam Polk

The entrepreneur behind Everytable, who created a university and a franchise model to enable his employees, particularly from Black and Latinx communities, to become franchisees.

Lyndon Johnson

Former US President whose democratic cabinet John Gardner served on, as the only Republican, during the negotiation of major civil rights legislation.

Darren Brown

A mentalist and artist from the UK whose work, like 'The Push,' demonstrates how otherwise moral people can be influenced to do terrible things, reinforcing the idea of the 'monsters and angels within us'.

Kevin Rose

A past podcast guest and a friend of Tim Ferriss, who invested in Magic Spoon cereal.

Rohinton Mistry

Author of 'A Fine Balance,' a book mentioned by Jacqueline Novogratz as influential.

Seth Godin

A mutual friend of Jacqueline Novogratz and Tim Ferriss, who helped Acumen Academy build 'The Path of Moral Leadership' course and whose philosophy on taking action aligns with Jacqueline's.

Joni Mitchell

A musician whose 'Blue Album' Jacqueline Novogratz was listening to while weeping on a plane to West Africa, marking a significant transition in her life.

Ralph Ellison

Author of 'Invisible Man,' a book that taught Jacqueline Novogratz the importance of seeing others fully, especially in the context of racial reckoning.

Bryan Stevenson

A civil rights activist who advocates for 'getting proximate', a concept similar to Jacqueline Novogratz's 'immersion' in understanding problems.

Viktor Frankl

Author of 'Man's Search for Meaning,' a book Jacqueline Novogratz highly recommends for its lessons on finding dignity and resilience in the darkest times, even in the Holocaust.

Michael Novogratz

Jacqueline Novogratz's brother, working at Galaxy Digital, mentioned to highlight how siblings can take different professional paths yet share a common drive for change.

Debbie Millman

A guest on Tim Ferriss's podcast, whose interview Jacqueline Novogratz referenced as an example of Tim's vulnerability and courage.

Organizations
University of Virginia

Jacqueline Novogratz's alma mater, where she worked multiple jobs to pay for tuition.

Stanford Business School

The business school Jacqueline Novogratz attended, attracted by its Public Management Program and its alignment with her goal of building companies to serve poor people.

Aspen Network of Development Entrepreneurs

A trade association recommended by Jacqueline Novogratz as a resource for connecting with strong impact investors and learning about the sector.

Acumen

Founded by Jacqueline Novogratz in 2001, it invests philanthropic patient capital in entrepreneurs addressing poverty, and has expanded into for-profit impact funds and a social change academy.

African Development Bank

The location of Jacqueline Novogratz's small office in West Africa, where she experienced early challenges and resistance.

Harvard Business School

Mentioned as a contrast to Stanford, with its annual report depicting graduates with dollar signs, reflecting a focus on profit that Jacqueline felt didn't align with her mission.

Forbes

An American business magazine that called Magic Spoon the 'future of cereal' and honored Jacqueline Novogratz with a Lifetime Achievement Award for social entrepreneurship.

Rwanda

A country where Jacqueline Novogratz helped establish a microfinance institution for women after a new law abolished the Napoleonic Code, granting women greater financial autonomy.

BlackRock

A global investment management corporation, mentioned by Jacqueline Novogratz as an example of a large institution that she hopes will adopt lean data and more impact-investing principles.

Rockefeller Foundation

A philanthropic organization where Jacqueline Novogratz worked, gaining insight into the power of philanthropy.

Grameen Bank

A microfinance organization founded by Muhammad Yunus, which greatly inspired Jacqueline Novogratz's early work in using banking tools to reach low-income people.

Acumen Academy

An initiative launched by Acumen in 2020 to instruct individuals in global social change, offering tools and blueprints for those on the path of social change.

Global Fund

An organization that collaborated with Acumen and Sumitomo to purchase and distribute malaria bed nets in Tanzania.

Women's World Banking

An organization started by the aunt of a Chase colleague, which offered Jacqueline Novogratz her first opportunity in West Africa to pursue microfinance.

Galaxy Digital

The company where Jacqueline Novogratz's brother, Michael Novogratz, works.

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