System Level Investing: The Next Era of Investing

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Welcome to the Business Gate podcast, where we talk about all things business, marketing, and entrepreneurship. I’m your host, Calan Breckon, and on today’s episode, I have co-founder of Colorful Capital, William Burckart. Colorful Capital, spelt the American way, is a venture capital firm bringing capital support to enterprises founded and led by members of the broad LGBTQ+ community. William has also co-founded the Investment Integration Project (TIIP), which helps investors manage systemic risks and invest in related solutions. William is an adjunct professor of international and public affairs at Columbia University’s School of International and Public affairs (SIPA) and a fellow of the High Meadows Institute.

I’m excited to talk about the new era of investing and colorful capital with William today, so let’s jump in.

Welcome to the podcast, Bill. How’s it going?

[00:01:38] William Burckart: Doing well. Doing well. Thank you for having me.

[00:01:41] Calan Breckon: Yeah, I’m really excited to dive into the topic that we’re going to be talking about today. So with that, we’re going to be talking a lot about investing. So let’s start off with, can you explain what system level investing is and why it’s important? Because I had never actually heard of this before I dove into this. So what is system level investing and why is it important?

[00:02:04] William Burckart: Yeah, sure. So system level investing, it’s a emerging trend in investing. Um, builds on impact investing, sustainable finance, uh, universal ownership, kind of related concepts, but it extends how we think about investment. And so if you think about traditionally, like, conventional investing, it started out as like, individual stock picking. Oh, I really like that company. So im going to just invest in it.

You get modern portfolio theory comes of age a couple decades ago, and that really went from, okay, now were not just focused on an individual stock or a company, but were focused on a basket of stocks, a basket of companies. What system level investing does is it extends it a little bit further and says, now we need to manage the context within which these companies exist. And a lot of that is due to the fact that a lot of these big systemic issues. So think climate change, think income inequality, racial inequity, or LGBTQIA inequity, that they’ve grown in such complexity and magnitude that they’re becoming something that investors and companies can’t afford to not manage, to not grapple with. Um, and that’s really the basis of system level investing. It’s helping investors to intentionally go beyond just a portfolio lens to really understand the context and manage the context within which they, uh, exist.

[00:03:24] Calan Breckon: Okay, so when you were talking, what popped into my head initially is ETF’s is the basket of investments that you can do. And this takes it a deeper level than that, saying yes, but also caring about what is in that basket and what’s actually going on behind the scenes of sustainably and for all these other aspects. So, um, like, I guess the word activist comes to mind if somebody wants to use their money and invest and enjoy that gain, but also be an activist and the. Towards the things that they care about and that they want to support, is this kind of going down the right trail in that direction?

[00:04:02] William Burckart: Yes. Uh, so we would oftentimes the. The distinction that we’ll make is that most investors are very much focused on seeking alpha. And that’s.

And it’s peculiar in the sense that up to. It’s anywhere from 75% to 90% of the variation in returns that an investor can anticipate comes from the health of the overarching economy. So what we would refer to as the beta of the market.

And so one of the terms that often gets thrown around in addition to system level investing is this idea of beta activism. And that’s something that John Locomick and Jim Hawley, who myself and Steve Lautenberg wrote one of the primary books on system level investing called 21st century investing. Jim and John wrote the other big book which really tackles the fundamentals of modern portfolio theory called, unsurprisingly, moving beyond modern portfolio theory. And they really popularized this idea of beta activism.

[00:04:58] Calan Breckon: Okay, so a very original name.

How do these system level investing differ from the traditional investment strategies in, like, the general population, then? I think we kind of have touched on it, but let’s take that a little bit deeper on, like, how it actually looks to, like, an everyday layman’s person.

[00:05:20] William Burckart: Yeah. So I’ll give you an example of one of these kind of approaches in action.

And so if you think about, like, minds, tailing minds, things like that, all around the world. So these typically operate in regions that the safety standards, other sorts of protection, worker protections are a little bit more loose.

And so there was this really interesting illustration a couple years ago, this brazilian tailing mine for this company called Vale. So Vale had this big mining disaster. A couple hundred people were killed. And basically a lot of institutional investors were like looking at it. So they had holdings in Vale and they basically were like, okay, you know what? We’re going to divest from it. And that’s one of those classic ways that a lot of sustainable or impact investors, it’s divestment is one of those classic things, right? But they took it a step further and it was just this acknowledgement of saying, look, this is a issue that’s systematic across the entire industry, the entire mining industry. It’s not just exclusive to Vale. And so a number of big institutional investors essentially got together. They use their collective clout to ultimately influence changes in the entire industry. And so they did things like building a database to increase transparency on these different minds, to understand where there’s been health violations or other sorts of stability violations. Right?

And then they were connecting that to this bigger idea of saying many of the workers that work at these mines are dealing with kind of low income, they are living paycheck to paycheck. They’re not getting the support from a healthcare perspective. So there’s a lot of precarity that is associated with it. So they continue to push for these greater transparency within the industry and greater reforms within the industry.

One of the investors that was part of all this basically said in a quote, you know, when we started out doing our engagement activities, we started out engaging specific companies. Then with experience, we engage entire industries, and then they start to actually engage the problem. And that’s really like when you think about what the implications are for investors of all sorts. It’s just that idea that when you think about as we integrate impact or ESG characteristics into our investment decision making, oftentimes it’s still just focused on like, the things that are happening specifically at that company in terms of outside in risk. So is this a potential problem for our value chains?

And in a more narrow case, can we actually make investments that drive solutions to some of these big problems?

But that all is still very much focused on what that specific company or what that specific portfolio is doing, as opposed to acknowledging the real roots of these big issues that ultimately we have to do a better job at grappling with.

[00:08:18] Calan Breckon: Yeah, that’s a. That’s a lot to take.

I know. I’m just like, my brain is floating.

[00:08:24] William Burckart: Like, I’ve seen this from my grad students before.

[00:08:27] Calan Breckon: So, no, I love it because, I mean, a lot of people, a lot of people in my life, I didn’t grow up with money or anything like that. So a lot of people in my life have this idea of money, and investors is like, the bad people. They just take, take, take. They don’t actually give back. And hearing about this, where it, I guess, you know, the activists or beta, which you call it beta. Yeah, that kind of investing, where they’re like, no, not only are we going to, you know, we can divest, but we can also actively make change happen. I’ve not really heard a lot of those kinds of stories, unless it’s kind of the big top name. People doing specific things to specific companies where they’re like, I just don’t like the way that this is done, or, I want Disney to go in this direction. And that’s what you usually hear of, of like, oh, boohoo, billionaire. You don’t hear about the actual boots on the ground things that are happening in specific sectors and in specific industries that are changing that for the people there. Like, when you were talking about, um, the workers, I just kept thinking about, like, first world, third world, and us being able to change the rules for them because they don’t have the power to change the rules for themselves just because economically, of where they are. And is that where you’re hoping a lot of this is going in that direction on a large level, to do that in many places, across many industries?

[00:09:55] William Burckart: Oh, yeah, yeah. And it’s a great question because it gets, I think, at the heart of the ambition of what we’re all trying to do with this. And so you have a situation where, like, even with the. Okay, so I just co authored a report with Lloyd. He, um, under colorful capital. And so it was called outsize impact, and we basically were framing LGBTQIA plus inequity as a systemic risk. And so we’re really going through and trying to unpack that to show, like, this is this multilayered, very complex thing that has implications for criminal justice, educational attainment, professional opportunities. You go down the list.

And so part of what we’re trying to challenge folks on is to basically say, like, where most impact or sustainable investing kind of sits at, is to say, take, like, the sustainable development goals. Like, a lot of people will say, like, oh, you know, we put that on our report, because we’re in alignment with addressing climate change, what ends up happening is that based on the infrastructure that’s currently available to them, they’re looking at it from the context of like in alignment with the sdgs. So we made these investments and they created x amount of jobs, or they have avoided x amount of carbon emissions. But it doesn’t necessarily put that in the context of the actual problem. So if we’re saying, right, well, we created this many jobs, and then what did that lead to in terms of outcomes, both for the entire industry, the sector, and then ultimately the systems. And the systems are not just the, you know, it’s like we think of environmental systems, it’s like water, the atmosphere, minerals, think of social systems, it’s like concepts around human dignity and rule of law, like things like that. Um, and so part of the challenge is to kind of get to help them understand that, like a lot of what we’ve done has been almost like window dressing, where we’ve made some, we’ve achieved some progress. And I’ve been in the industry long enough to really be able to point to that as my co founder. And one of my companies is uh, one of the godfathers of the whole sustainable investment movement. And so he’s seen the progress. But when we got together, it was like this shared acknowledgement of are we just naval gazing or are we truly driving fundamental transformational change that we all need to rely on as investors to drive returns? But then what the world needs to really drive shared global prosperity.

One thing, if you permit me to just go wonky for a second. So lets just take the issue of income inequality. How is it systemic and how is it that investors contribute to it? And so you have a situation. It starts with this kind of flawed belief, the flawed belief that all of the social and this predominance of short term thinking. So modern portfolio theory, shareholder privacy, short termism, so everybody’s kind of driving towards that. We want you to make as much money grow as fast as possible in a short time as possible. So basically the idea is to say any of the positives that are being created by that invisible hand of the market, that they’ll offset any of the social or ecological failures that are then being created in society or in the environment.

It’s what a leading thinker named Duncan Austin talks about, this kind of like externality denying capitalism. So we don’t really cost into production, to commercialization, all of that, the real cost of all these things. So that then translates into these kinds of value extractive behaviors around you as an investor may be because you’re motivated by short term returns. You may be preferencing companies that engage in, say, tax avoidance or tax deferment. That’s a pretty common thing that people are selling more and more, waking up to. And then you think to yourself, well, Bill, how is that actually contributing to income inequality at a global level? Well, it contributes to it because if you’re preferencing companies and rewarding companies for engaging in tax avoidance or tax deferment, you’re actually decreasing the amount of revenues that government has to essentially create the stable operating environment for those companies to thrive. And so you just have this kind of shifting of costs and that ultimately society and the environment has to bear the brunt of it and it gets unevenly distributed. So we’re sitting in industrialized nations, and as a white man, I’ve been afforded every privilege.

That’s not going to be the case. Exactly to your point that you had started with, which was like, when you start to get to other emerging economies where there’s less protections, where there’s less resources, that’s where it gets really, really severe. And so part of this is trying to grapple with how do we begin to address these issues more fundamentally so that we can start to mitigate or otherwise avoid some of these big long tail risks that are ultimately intergenerational. And that’s, you know, this can be performed by our great grandchildren and, you know, beyond that.

[00:14:57] Calan Breckon: Yeah, this, there’s so many directions I could go in right now. This is like, in my head, I, I’m thinking about conscious capitalism because we live in a capitalistic world. That’s what’s been created, that’s what we were born into. But now, especially millennials and younger generations are figuring out the game and we’re like, hold the phone. This isn’t working for everybody. And this is actually doing a lot of damage to not just us individually, the world as a whole. Like, it is not sustainable. So the me, me, greedy, greedy, greedy mentality is not going to be sustainable. We can see it. It’s very clear as day. We’re now needing to move into a different direction within the same system and being like, okay, well, how can we break the system, but how can we break it in a way that’s sustainable, that doesn’t create complete havoc? And it sounds like this is a way to use your funding, use your money and support the things you want to support and move in the direction you want to move in without completely, like, burning down the house.

[00:15:57] William Burckart: Yeah, I think that. I think you’re the definitely on the right track with it because it’s. We often will talk about, you know, there’s this, in the very wonky world of systems, right? There’s this debate between, you know, is it incremental systems change? Is it transformational? And where I come down on is just like, I’m pragmatic. I mean, at the end of the day, these systems are built over a millennia. They. There’s all sorts of things that are currently governing these systems. And particularly when we talk about the financial sector and the flows of capital, basically, the capital system, it doesn’t switch overnight. And there’s all sorts of legacy reasons for that, legacy regulations, all of that. And so we have to figure out how to do this in the most accelerated but pragmatic way possible.

Because this is this thing of, like, everybody wants social innovation and it’s like, well, it’s, you know, social innovation has inherent risk to it, too, right? Like, if you have a really innovative impact fund that’s doing something great, except that when you’re talking to a public pension plan that’s managing the retirements for a million teachers, innovation, taking really big risks with that, that’s not part of their fiduciary duty. Their fiduciary duty is to manage these intergenerational risks. You can’t preference one generation over another. But you have to do that this very pragmatic way because to your point, if you move too fast, you potentially risk really disrupting everything in a very bad way. If you don’t move fast enough, you won’t be able to get ahead of some of these big crises before they happen.

And so, yeah, so it’s like, we often talk about everybody. It’s like value extraction is so much of what the current system is kind of dominated by.

And so everybody is like, well, now we need to get into value creation. And I would argue that it’s actually, it’s a three legs to the stool. It’s a combination of, we’re still going to be extracting value, we still need to be creating value, but we also need to be preserving a lot of value that’s already currently in the systems that’s just not priced into the market. And so it’s walking on those 3ft that I think ultimately is going to get us, I would actually say not conscious capitalism, but it’s like resilient capitalism. Because at the end of the day, this is about opportunity as much as it is about risk mitigation. And it’s not like, necessarily a value driven thing. This is real material stuff that investors have to consider if they’re going to have long term stable performance. And that’s essentially what we’re trying to get to.

[00:18:24] Calan Breckon: Yeah. So we’ve been extracting value for a long time from the working class.

I would venture to say that the boomer generation was born into the, after the war, everything is good. They were born into good times, and life just went that way. And they are now one of the richest generations. And they’ve been extracting a lot of wealth out of everywhere for a long time. That now the younger generations, millennials, Gen Z, Gen Alpha, we are sustaining that through our credit, through our credit cards. We don’t have the same things that they had before. And everybody wants everything to keep growing, growing, growing, growing, growing. And we’re now at a place where that’s not going to happen, especially right now, as we record this. This is being recorded on August 7. Who knows when it actually comes out, what’s going to have actually happened? But we’ve both noticed that the, the downturn is kind of taking a start with the S and P 500 and a lot of other investment pieces are happening right now. We don’t know what’s going to go on with that. But I feel like it’s this kind of changing of the guard on a generational scale of like, there used to be this mentality of the havers, and in order to have the havers, you have to have the have nots. And I feel like a new generation mentality is coming in with, no, we feel like more people can all be havers on a more equal, balanced level. And some people might call that more socialist, but in general, treating people well and actually helping them will benefit everybody more in the long run, because when you take care of your people, they take care of you in turn. Instead of just let me extract as much as I can out of you and then leave the husks for later.

I’m throwing down with that.

[00:20:09] William Burckart: The tension that you’re identifying is, it’s the classic, are you short term focused? Are you long term focused? And anybody that’s long term focused will understand that these issues have been building up for a while. It’s going to take a while to unravel them and that you essentially stay the course, whereas if you’re short term focus, the classic behavior that you’re describing, that’s just going to get perpetuated. And I think when you think about the changing trends in terms of I remember doing this report a couple of years ago where it was really focused on how to help financial advisors. So there’s 350,000 financial advisors in the US alone, and essentially those that are independent, but also affiliated with some of the big wire houses, basically helping them understand how do you really start to meet client demand for sustainable finance or impact investing? Like, what does it look like in your process? And I think when it gets down to it, every client is different. Every client has kind of, like, what you can provide, an institutional client versus a retail client is going to be different, all that sort of thing. But I think the really important point that we made in the report was to say, look, this is fundamentally about client retention and recruitment. If you know that demographically, millennials, gen Zers, women predominantly want to see their kind of social values reflected in their consumption and in their investing. And you match that with the fact that, like, investment news came out with a statistic where it was like, up to, like 73% of wealth holders when there’s been a change in wealth. So basically, from the patriarch to either the matriarch or the kids, um, 73% of the now resulting wealth holders go shopping for a new advisor. So if you know this is going to also help.

[00:22:05] Calan Breckon: Heard that stat. I heard that stat, yeah.

[00:22:08] William Burckart: And it’s a power. It’s like, look, at the end of the day, don’t do this out of the kindness of your heart. Do it because it’s actually going to matter to your bottom line, long term, with your book of business. And so figuring that out to help people understand that this is not, this is not do gooder stuff. This is not woke capitalism, whatever frame that people want to paint with this, this is really about saying, like, how can we create the most stable, long term, resilient investments possible? And you see that, like, the emergence of the circular economy moving from take, make, dispose to regenerative by design. Like that’s, you know, it’s hit some headwinds a little bit over the last few years, but generally speaking, like, that kind of mentality to understand, like, the implications of that with other industries and with other thinking, that’s. That’s where this is all ultimately headed. So, you know, it’s just, to your point, there’s this period of time where we have to kind of navigate through a lot of legacy systems to get to where we can really start to realize the potential of a more systems focus.

[00:23:07] Calan Breckon: Yeah, so I would say, or would you say that system level investing? One of the hopes is that eventually it could be very well known around ETF’s and that it can be something that’s super simple and super easy for the everyday person to get involved in.

[00:23:23] William Burckart: I think when the infrastructure for it and the data that for people to be able to really make decision, useful choices based on a systems focus, it’s just a lot of the opportunities for education, the data, the strategies, all of those things are still emergent. And even the kind of regulatory and policy world is catching up. You see stewardship codes being enacted in a couple of different areas in the UK in particular, where they call specific attention to climate change as a systemic risk. And so you’re starting to see it manifest more and more. But the kind of generally shared understanding of what this is best practices, the kind of tools, the resources, the networks, all that, all still emergent. So, yeah, eventually I’d like to know that there’s going to, in the world of potential investable opportunities, that this is a consideration. But it’s partially that, but it’s also partially understanding that the progress here is going to be as much about allocating capital as it is about really influencing the behavior and the culture of finance more generally. And so there’s a couple of ways that that happens, but that’s the general idea.

[00:24:34] Calan Breckon: Okay, cool. So you do a lot of work in this realm. How does this connect to all the different pieces that you’re working on with the investment integration project at Columbia? Colorful capital? How does this all connect and work together for you?

[00:24:50] William Burckart: Yeah, yeah. All the gray hair that I now have is reflective.

[00:24:54] Calan Breckon: I see no gray hair. Go on, go and watch this on YouTube, folks. There is no gray hair.

[00:24:59] William Burckart: It’s really nice of you to say that. So, yeah, so when I was, you know, for years, I had been working in the kind of venture philanthropy, kind of innovative philanthropy and like, impact investing space, both as a consultant, but then also as somebody that was, I ran these big initiatives out at Johns Hopkins that was attempting to put kind of an analytical lens on what was happening.

And over the years, I increasingly was just acknowledging all the progress that was happening in terms of our ability to understand the material effects of these environmental, social, governance characteristics, but also the potential to impact these issues.

But I was always just frustrated with this like whole thing where. But are we actually tackling the real big fundamental problems?

And is the industry even equipped to help, to contribute to do that? And so it was, this had been in like 20. God, this was like 2014. I had written a white paper for an industry body and I was basically like, impact investing at this point in time was really just like output investing, and we should really have more of an outcomes focused. And one of my writing partners who had worked with me on a previous book project, this guy, Steve Lydenberg, who co founded TIIP with me, I had shared this piece of writing with him and I was like, yeah, I think this is. What do you think? Like, is this onto something? And he goes, he’s like, you’re talking about version 2.0 of what we do. And I was like, yeah. And he goes, I’m thinking about 3.0. And I was like, well, what’s 3.0? And he’s like, systems. And that was when, you know, for him. So if I’m coming at it more from the frustration of like a private market participant, focus on private market investments like foundations, stuff like that, he was coming at it more from the public market ESG integration world, where it was to say, like, we’ve made some progress, but yet again so incremental and are we actually driving fundamental change?

All of this is a long way to say when we established TIIP in 2015. So we celebrated ten years next year. And when we established it, it was really about bringing together a lot of the key stakeholders that have been so pivotal to the development of this kind of thinking and different iterations over the last decades of and throughout the years. We named this thing, built baseline evidence on who’s doing what, started to really frame it for different kinds of stakeholders. So we run these big community of practice, investor cohort programs and all this stuff at some point. And this was about, I would say, three and a half years ago, TIIP’s doing well, and we’re getting a lot of interest to focus on climate change, income inequality, some of the bigger, the big systemic issues. And I was in a conversation with Megan Kashner. So Megan Kashner is the professor at Kellogg, runs the big social impact, and shes one of the big gurus. And we got into this conversation about essentially community building amongst the LGBTQ+ population within impact investing. And as we started to really think about it, we were like, there’s a real opportunity for the impact investment and sustainable finance field to better focus on this specific systemic risk, which is LGBTQI plus inequity. And so it was just this real opportunity to say more could be done here. Wasnt necessarily that we weren’t quite sure yet what the actual shape it would take. And so we did a bunch of research where we were looking at, well, what’s the real need in the market? And it wasn’t at the angel stage. It wasn’t at subsequent series. It was around this kind of pre seed and seed gap.

And so we really started to think through, well, what could a vehicle look like that could help to intervene at that level? And so that was really what set the stage for colorful capital, which was really my attempt, along with Megan and now Sultan Bryce, to basically take the system level investment lens but apply it to addressing the issue of LGBTQI plus inequity, because it was just something that. It was so personal to me, but it was also something that was going overlooked and unaddressed by the broader market.

And so we launched it a couple of years ago, and then along the way.

So I had written or co wrote this book with Steve Lydenberg on 21st Century Investing, and that got released in 2021. So it was. I guess it was like, two years later that Columbia launched something called the Sustainable Investing and Research Initiative, led by Caroline Flammer, one of the big gurus in academia, focused on this stuff, and she had reached out to say, hey, I’d love for you to come teach a course on the book.

And so we designed it. We did it. It was very popular, and then we were able. John Locomick, who wrote the other big book or co wrote the other big book, he joined me as a co instructor. So we’ve been doing that now over the last. I think we’ve hit. We’ve done. We’re about to go into our fourth semester, and we just see this, like, incredible need and hunger, and it’s been fascinating where I will often show up in these rooms wearing both my TIIP hat but also my colorful capital hat. And the students, it’s incredible for them because I think there’s a lot of them that identify with our community that they just. It’s like, oh, my God. Like, these are real investors that are really taking this seriously, and there’s a whole other way for us to drive progress and greater resilience with our community by harnessing capital markets. And so I think that that’s where all of these things have just kind of become mutually reinforcing because it. But the common thread being system level investing and how it gets applied and thought of in different contexts.

[00:30:45] Calan Breckon: Okay, I want to dive a little bit deeper into colorful capital and exactly what you are working towards and how it’s supporting the LGBTQ community specifically for colorful capital.

[00:30:57] William Burckart: Yeah. So, colorful capital, an investment strategy that is specifically trying to help address LGBTQI+ inequity by investing and supporting companies founded and led by LGBTQIA leaders, because they have been habitually overlooked and undervalued, which has created this kind of imbalance within society, where an entire population has essentially been excluded from decisions around capital allocation, around being funded, around all sorts of things due to these big systemic qualities. And so this is the specific way that we are joining with others in the industry, like chasing rainbows, Pride Fund identity VC in Europe, and misfit ventures in Canada. I mean, you go down the list, there’s a number of us that are beginning to really show that these founders that have been habitually overlooked and undervalued, if properly resourced. There’s real gold in them hills, not just in terms of returns, but also the implications for what it could mean for the actual community and really driving greater system health by virtue of bringing the entire community in in a really productive, effective way.

[00:32:15] Calan Breckon: Oh, big time. And I’ve had multiple people, from what you just mentioned on the podcast, Mandy Potter from Misfit Ventures was on, Ben Stokes from chasing rainbows, and we’ve all talked, and Brian Richardson from StartOut talked about the statistics, like, 36% LGBTQ businesses create 36% more jobs. We have, what is it, 44% more exits and 144%, I think, percent more patents filed. And we’re just an overall better investment. But these stats, this data didn’t come out until recently, so we’ve not really been able to move on a lot of this stuff because we’ve been saying it, but everybody’s like, well, where’s the proof in the pudding? And now we have it. So now all these things are starting to crop up because people are going, oh, wait, this is actually a good investment.

[00:33:06] William Burckart: Oh, yeah. And I think so. It’s important that people really do. And one of the things that Lloyd and I covered in outsized impact was really just about the performance and economic realities and what having more diversity of thought on leadership teams, in terms of who you’re investing in, in terms of who’s making the decisions on investment, how that ultimately is a driver of returns, it’s a driver of valuations, it’s a driver of adaptability in the face of issues and opportunities.

And so that’s really important. It matches that with what Brian was telling you about, just the kind of economic impact.

And so thats part of just really continuing for us to drive that aspect home. I think the other aspect thats really important for us to drive home is that, and it gets back to this whole client retention and recruitment. Morgan Stanley, the Institute for Sustainable Investing did a kind of seminal, groundbreaking study that was released a year or two ago and start out and colorful capital both helped to inform it. And it was this study where basically it’s like they put the on the empirical map. They basically did a primary analysis. I think they surveyed 1500 of investors, advisors, folks within the Morgan Stanley Universe basically showing very clearly that there was empirically you could show that there was real client demand for this LGBTQI plus equity investing for lack of a better overarching terminal and that but matched with the fact that theres just not a big product set. And so if you have this overwhelming client demand thats just going to continue to grow, why is the market not responding and the markets not responding because of heuristics, because of these legacy things that make this issue systemic. And so thats really what were doing. Its all the other names that weve been talking about. All of us are collectively trying to drive towards addressing that knowledge divide or these heuristics basically, yes.

[00:35:10] Calan Breckon: And you know it’s so true. I think don’t quote me on this, but I think it was accenture that did a study that was looking into DEI, you know, is the big term that everybody’s hating on right now. Well specifically down the US. Specifically like white men who run things.

[00:35:28] William Burckart: I believe they’re called hail stale males.

I’m old but well I’m queer so.

[00:35:38] Calan Breckon: I’m gay so I’m on a different spectrum there and I’m pretty confident that we’re both in that group.

[00:35:43] William Burckart: So as I wear my.

[00:35:45] Calan Breckon: Yeah, as your rainbow bracelet. But they looked into Dei and kind of the overarching money that gets left on the table by exclusionary practices and it was over. Just in the US alone over $1 trillion dollars got left on the table because of exclusionary practices which at the base level of it, I’m an efficiency person and I’m like if it makes sense, why are we not doing it? And all I can think of is like the only reason that this happens is because somebody was raised a certain way and was like no, I don’t like it. And it is just stuck in their ways. Instead of being like this literally is going to make us more money and makes more sense, why are we not doing it? And it makes everybody feel good and it feels good to do it. It’s literally just hate baked into the system.

[00:36:32] William Burckart: Well, so we talk about this where it’s like so what’s if income inequality, the underlying belief, which is this idea that saying like you that the benefits that were being created by the market, even though we’re excluding big portions of the population like that will offset these socio ecological failures.

If you look at racial inequity, which is another big area that I focused on through my work at TIIP, the fundamental kind of guiding belief there was around growth at any cost, including human abuse, also because it’s the US, white dominance was definitely a factor in that, but it was just that idea of saying, we keep growing, even abusing humans.

When you think about LGBTQIA plus inequity, I think the belief that we’re ultimately confronting and challenging is this. This myth of the objectivity of markets.

Markets are not objective, and I think that’s what we’re all really starting to understand. And particularly as these issues grow in complexity and magnitude, and the negative ramifications, both in terms of performance but also social cohesion, are becoming more and more real. I think that’s the thing that people are starting to really grapple with and understand, and that it’s not just about the controversial aspects to it. It’s also about to the point that you were highlighting. It’s about leaving money on the table. And if you’re a good investor, why would you do that?

There’s no objective reason why you would leave money on the table.

[00:38:05] Calan Breckon: Many reasons. Racism, misogyny.

I remember watching. I’m not a big tikToker, but I watch sometimes. I remember watching this TikTok and there was this gay guy on there and he was talking about it, that he had this epiphany moment where he’s like, homophobia for gay men is based in misogyny because they look at gay men as women and women as less than. Therefore, that is why they are homophobic towards gay men. And it just blew my mind because I had never thought about it in that way before, that the reason they don’t like us is it’s because we align too closely with women and they think of women as less then, and it was crazy. And I was like, holy shit, that just is so true for so many things. Because right now, who’s still running it? A lot of straight white men are still running the world, and it’s slowly but surely changing. But that’s why we have the pushback right now, because they’re terrified that it’s going to change.

[00:39:05] William Burckart: Yeah. And I mean, and we’re sitting there, sitting here talking about this from our perspectives. Imagine if you are a woman that is also asian, that’s also trans, that’s also an immigrant. Right? Like, the world of challenges and barriers to access are just so much grander. And severe for other portions of the community, other segments of the community. So it’s just this thing where you’re like, you’re like, this is for. It’s not even just about the barriers that we have to break down or the proof points that we need to make generally as a community, but in particular for the kind of most excluded segments of the community. That’s ultimately, it’s like, you know, if you really are truly about putting intersectionality at the core of your thesis, like, you got to back that up. And I think the more that we can demonstrate that, yet again, it goes back to more diverse thinking, the more adaptability, the more resilience. All of those things that then translate to these really positive outcomes, both for society but also performance.

Yet again, it goes back to, it’s like, why would you ignore it? Why? And I say that knowing full well why they do, but.

[00:40:15] Calan Breckon: Right. Um, I feel like we could talk about everything under the sun like this for hours because this is very riveting conversation. So thank you. I’m going to finish off with saying, uh, I’m ready for women to take over because I just think it’s going to be better.

[00:40:30] William Burckart: Well, I mean, I mean, maybe. Maybe Vice President Harris is the, the one that breaks the, breaks this final glass ceiling there.

[00:40:39] Calan Breckon: Our fingers are crossed up here in Canada. Like I’m hoping and praying for, for the US and for the world at large. I just. It’s time. We’re ready. Like, let’s make this happen. Um, Bill, this has been a phenomenal conversation. Thank you so much for being guests on the podcast. Where can folks find out and find out more and connect with you?

[00:40:59] William Burckart: Yes, that’s a very good question. So, um, if they go to tiiproject.com, they can see the work that I’ve been doing with the team there for institutional investors and really around the concept of system level investing. It’s all sorts of investor education programs, training programs that we run.

Colorful capital. I think it’s literally colorfulcapital.com, but don’t quote me, and I’m sure my colorful.

[00:41:25] Calan Breckon: Capital, but spell it american, because I had to. Do you know how many times I had to focus on not putting the U in it every time I wrote it out for this interview?

[00:41:36] William Burckart: Yeah, I mean, look, that’ll be something that we have to really grapple with when we expand beyond the US, so that’ll be fun. But, yeah, so that’s where a lot of the work that we’re doing, obviously, with supporting founders.

So always, yeah, love to talk about that more. In addition to that, though, we do things in coordination with others, and I think I would be remiss if I didn’t highlight something that Patrick Driscoll, who was one of the co leads at Chasing rainbows with Ben and other colleagues, he essentially helped organize a group of asset allocators focused on LGBTQ. Addressing LGBTQ inequity that met at the White House really were able to provide a number of different recommendations to try to advance not just the investment community, but also the general community of LGBTQIA.

So I would encourage folks, there’s a group called venture out that has been coordinating a lot of that, and I would encourage people to touch base there.

And then if you are a graduate student and or you want to become one or you’re an executive education, I do teach these courses at Columbia University at the School of International and Public affairs, and, you know, always happy for people to drop by, take a listen, and learn more that way.

[00:43:06] Calan Breckon: Fantastic. Thank you so much for being a guest on the podcast. I’ll make sure that all those links are in the show notes for those who are listening. Thank you again, Bill, for being on the show. This was fantastic.

[00:43:17] William Burckart: Thank you for having me. And I look forward to helping amplify.

[00:43:21] Calan Breckon: Wow, I could have kept going for hours with William. I find this extremely fascinating and extremely exciting. I know that when I’m doing my investing, nothing that I’ve done a ton in my life so far, but when I am, I do look for those kind of specific things about what I’m investing in, and something like this, like an ETF that had all this already integrated would be just so perfect to be able to invest in. So hopefully things move in that direction a little bit faster. Thanks for tuning in today. Don’t forget to hit that subscribe button and if you really enjoyed today’s episode I would love a star rating from you.

The business Gay podcast is written, produced, and edited by me, Calan Breckon. That’s it for today. Peace, love, rainbows.