Momentous Start to 2011

Early last year, I wrote a post that said basically that I was not a psychic and could only hope that good things were going to happen during the year. Shortly thereafter, the Haiti earthquake struck and some time afterwards the same happened in Chile – and before we reached the end of the first semester came the BP oil spill. I guess that if I reviewed every year looking for extraordinary events, I would come across a number of those natural catastrophes and political coups. But 2010 had a particularly momentous start – and so did 2011 with the Tucson shooting and the political upheaval in the Middle East and North Africa region (MENA).

Both were unexpected. Despite the fact that weapons are ubiquitous in the US, particularly in certain parts of the country, mass shootings remain rare and are mostly limited to folks unhappy with their ex-employers often and going back to shoot ex-colleagues randomly. The random nature is always what makes those events so extraordinarily upsetting to most. You hate your old boss and get to the point where you want to kill him or her. Well, shoot the bastard and go to jail for life – but why shoot the folks around him/her? The Tucson shooting was a huge shock in the US because of the consensual figure of Gabrielle Giffords and of the increasing polarization of the political debate in the country. Without implying that the shooter was inspired by some extreme rhetoric he heard on TV – and Obama refused to go there in all his comments, including in his landmark speech at the victims’ funeral service – there is a broad consensus that the level of anger and aggressiveness in US politics is near or at an all-time high, at least considering the last 40 to 50 years.

In America, people strongly relate to individual stories, so with the media massively reporting on the stories of those who died in Tucson (the young girl, the legislative aide, the judge, etc.), the tragedy was perceived as even more dramatic. And there were the heroes too, the one who saved Giffords by attending to her wounds right away or those who somehow tackled the shooter and managed to get him to stop shooting.

Individual stories are also what made last year’s contestation in Iran so striking, particularly for the millions who saw the young woman Neda that was shot during a demonstration die on camera. It is also how the Jasmine Revolution started in Tunisia. A young street vendor who was asked to leave his usual spot by the police for no good reason chose instead to die by immolation (he burned himself alive).

The Middle East has been characterized by strong regimes and is the region in the world where democracy is most lacking. Lebanon is the only country in the region (outside Israel) where there is a regular election cycle and a true multi-party system. Masses in MENA lack a voice (how to express discontent in a country where strong rulers see dissent as a risk to their own power) and lack economic opportunities (there are huge disparities between the rich and the poor and the fruits of economic growth continue to be very unevenly distributed). This is the best recipe to create a generation (two generations by now) of disenfranchised, angry, and disheartened folks, especially young people.

Finally Tunisia’s people took the matter in its own hands and said to its ruler who had enjoyed tremendous political and economic power that it was not going to take it anymore. Ben Ali and his partner Trabelsi controlled the majority of the Tunisian economy and had stakes in all the ventures of importance. Their extended families largely benefited from that incredible position of power.

In Egypt the rise in food staple prices was the trigger for the protests – there had been protests in late 2010 already. As is the case in Tunisia, nothing significant economically could happen in Egypt without Mubarak clan’s involvement. The political opposition did not have a proper voice either.

Western countries have played a controversial role over the past 30 years, not doing much to promote democracy with dictatorial regimes such as Tunisia and Egypt because those countries were stable and considered a “line of defense” against Islamic extremism. Western nations’ nightmare came to reality in 1992 when Islamic extremists won the elections in Algeria – the then regime preferred to cancel the elections and stage an actual coup all the while Western nations stayed put for the most part. A bloody 10+-year civil war ensued.

The fear of the rise of an Islamist regime among Western nations and in Israel remains today. And their concern is not unfounded. But the current situation also presents an amazing opportunity for those nations. They should:

-- Provide whatever assistance that Tunisia and Egypt’s new governments and others in the region will request to carry out more equitable economic programs, and

-- Stay vigilant that aspirations to democracy expressed by the people are not ignored while admitting that a transition to democracy may not be immediate and easy.

2011, Year of Liberation.

WikiLeaks and the Fight for Democracy

WikiLeaks is under siege in the US. Not only has the web site become an “enemy of the state”, which is not surprising given the series of punches that WikiLeaks has been throwing at the US government, but the public opinion seems to have turned against the web site. The major mistake that WikiLeaks made was to divulge the names of Afghan informants who chose to work with the Americans and other foreign forces there, making those people immediate targets for the Taliban and their friends. I don’t know frankly how democracy or transparency benefited from the release of those names and as such I believe it was a very unfortunate move.

That being said, the founding principle of WikiLeaks that receives information from insiders who often take immense risks to be whistleblowers and releases it through highly respected media outlets such as the New York Times, Der Spiegel or Le Monde remains extremely valuable in my eyes as it will bring more transparency to actions of corporations and governments that find themselves under pressure because of the risk that WikiLeaks will release details of their covert actions to the outside world.

That is why I found really shocking that the likes of amazon, eBay, or Mastecard took repressive actions against WikiLeaks in order to limit its ability to operate. The closest thing in recent years to what happened this week to WikiLeaks is the freezing of Osama Bin-Laden’s bank accounts and assets… Is WikiLeaks such a threat to our world? I don’t think so.

The personality of Julian Assange, WikiLeaks’ founder, has become a lighting rod for those who have come to hate the web site. Accused of sex crime in Sweden Assange has become a pariah in the US public opinion that has a long history of having banned celebrities that had committed repressible sex-related crimes or engaged in so-called immoral behaviors or were accused to have done so. The list includes Roman Polanski, Charlie Chaplin, and Woody Allen who is now viewed by most Americans as the worst pervert for having married his ex-wife’s adoptive daughter.

Assange has been heavily criticized by some of WikiLeaks’ early followers, partly around the decision to divulge Afghan informants’ names but also for its egomaniac and dismissive attitude towards others.

He will have to be replaced at the helm of WikiLeaks for the organization to continue to thrive. For the time being, we don’t know what is going to happen to him as he is now jailed in Britain. But I am concerned rather about WikiLeaks’ ability to continue to do its job as a news organization. If it is sticks to its original mission and avoids Afghan informant-type mistakes WikiLeaks does have an extremely valuable role to play in our world.

Story-telling at the EVPA Conference

The EVPA conference had three outstanding featured speakers. I have to admit that I am not a sucker for plenary sessions and guest speakers usually as I tend to get bored quickly during those. Jacqueline Novogratz, the founder and CEO of Acumen Fund, Percy Barnevik, ex-CEO of Swedish giant ABB and founder of Hand in Hand, and Sir Ronald Cohen, founder of European PE pioneer Apax Partners and social investor with BridgesVentures, were the featured speakers. They are pretty extraordinary individuals and each talked about his/her own organization that occupies a specific segment in the broader venture philanthropy and social investing universe.

It was quite interesting to hear how differently the three conveyed their message to the audience. Jacqueline and Percy mainly used story-telling while Sir Ronald was much more fact-based. Jacqueline told her usual Blue Sweater story which is her life story really as it starts in her early childhood. Barnevik did the same though he did not go as far back as Jacqueline did and started with his corporate days. Sir Ronald told us about his background growing up in Egypt and having to flee the country with his family after the Suez Canal crisis but the rest of his presentation focused on his last 10 years in the social sector trying to develop hybrid business models and, more recently, financial products targeting the social sector (social bonds).

All three got a pretty enthusiastic response though I felt (but I may be biased) that Cohen was the one best received. Also, I am used to seeing a much more emotional response to Jacqueline’s speeches across the pond in the US where it is not rare to see standing ovations and teary eyes among audience members after she has told her story.

The art of story-telling is based on the premise that the listener will come up with his/her own interpretations and draw conclusions and implications of what s/he hears. In contrast, the more factual presentation feeds information to an audience, thus lending itself to more limited interpretation. Also, personal stories in particular draw on others’ empathy. We tend to put ourselves in the shoes of the one telling his/her story. By eliciting our emotions the one relating her story will seek to compel us, to draw us to her, and also to possibly make us experience a a-ha moment of sort.

Therefore, there is much more processing going on with story-telling and that processing is often done through a very personal and subjective filter, especially when a personal story is involved. The audience has to work harder and the range of lessons and conclusions drawn will be wider than in the case of a factual presentation. But in the end listeners will be more engaged if they feel resonance with the story that they have been told. However, if they do not connect with the story the rest of the process, i.e. drawing lessons and conclusions and possibly experiencing personal growth thanks to a light bulb moment, will not happen.

Convergence around Social Investing at SOCAP10 and EVPA Conference

I attended SOCAP10, the conference on social capital markets (“at the intersection of money and meaning”), last month in San Francisco and the annual EVPA conference (European Venture Philanthropy Association) last week in Luxembourg. Reflecting its membership the EVPA conference was mostly attended by intermediaries (on the financial / grant-making and advisory fronts) whereas in San Francisco there were also a number of social entrepreneurs.

Coincidentally, social investing was this year’s topic at the EVPA conference. It is a sign of how lines are blurring ever more between grant-making and investing in this increasingly populated pond between charity gifts and traditional investments seeking maximum financial returns.

It is actually ironic to think that impact investing is a relatively new notion for EVPA that happens to have been founded by veterans of the private equity industry in Europe, thus folks who lived and breathed investing for most of their careers but who have defined their involvement in the social sector in the form of philanthropy. I don’t know whether they will be interested to go back to investing – albeit of social nature – and, if so, how big an adjustment this will constitute for them.

Jean-Marc Borello, the CEO of Groupe SOS, was one of the rare social entrepreneurs present in Luxembourg but that may change if social investing becomes a significant area of interest for EVPA members. I frankly find it much more compelling to hear about an entrepreneur’s (or grantee’s) adventure related by him/herself than “derivative” stories told by funders or investors about their beneficiaries’ experiences in the trenches – but one degree removed from the action.

Thus, EVPA will probably have to strike a better balance as far as opening the floor to investors / funders vs. investees / beneficiaries.

Another major difference that I saw between the two conferences was the geographic scope of the actions that were presented. Whereas most of those who attended SOCAP seemed to be working on projects or ventures focusing on emerging markets / developing countries EVPA members have kept a domestic focus, thereby reflecting their geographic preferences historically. But this is changing – Jacana Venture Partnership is a case in point. Jacana’s objective is to promote the emergence of private equity fund managers in Sub-Saharan Africa. Its co-founder Stephen Dawson is the former chairman of London-based Impetus Trust, one of Europe’s premier venture philanthropy funds and one that focuses just on Britain.

Talking about emerging markets and developing countries, it struck me how little those regions were represented at both conferences. Granted, it is expensive for folks to travel from Asia, Africa, and Latin America to Europe or North America and also, a lot of ventures focusing on those areas that I heard about at SOCAP are based in the US or Europe – which itself poses a question.

But a higher representation is needed (through invitations or sponsored participations) for northern countries’ people to hear a different perspective (even for those working in emerging markets / developing countries) and to make sure that conferences in glitzy San Francisco or Luxembourg do not become private club-like gatherings happening behind closed doors.

There was little reference in Luxembourg to a topic that was very present at SOCAP, i.e. current efforts revolving around building the enabling context for the social investing sector. B Corp, an innovative kind of company focused on doing both well and good, was recently created by B Lab and new reporting standards are being developed by GIIRS (Global Impact Investing Rating System), another creation of B Lab, and by IRIS (Impact Reporting and Investment Standards), a project of GIIN (Global Impact Investing Network – a network of social investors). The two sets of measurement systems and standards have different purposes, one (GIIRS) centering on social investing per se while the other one (IRIS) aims to come up with a common language for describing social and environmental performance in general for any organization.

Putting together a robust enabling context is the prerequisite for significant financial resources currently invested in other asset categories to flow towards the hybrid sector between traditional grant-making and investing. It is great that things are moving forward in the US - and the impact of those actions intends to be global (the G in GIIR and GIIN). But Europe has to take notice and be aware of what is going on across the pond.

The upcoming SOCAP Europe in Amsterdam in early May will be a good opportunity to bring the two continents together and I know that the EVPA folks have already started talking with the SOCAP organization about how to collaborate best for that event and beyond.

Chile: Proud Miners and Populist President

It is fascinating to see how the odyssey of the Chilean miners has captured the world’s attention for several weeks and how their rescue conveyed a message of hope – mining accidents do not end well in general as the most recent ones including in the US (in West Virginia last summer) constituted a painful reminder. Especially after the earthquake that struck their country in early 2010 this victory over fate is what Chileans needed the most.

I lived in Northern Chile for nearly two years – not that far from Copiapo and the location of that mine. I saw every day the faces of those folks from the North, the so-called Nortinos (Northerners), who for the most part have a mixed European and Indian (Native American) background. Despite Chile’s economic takeoff since the early 80’s and continued economic progress since the return of democracy the Northern provinces (Chile’s First and Second Regions) are still populated by mostly poor people. So, the mining industry in spite of its very tough labor conditions that still result in shorter than average life expectancy, continues to represent a major draw for the population as salaries paid tend to be higher than average.

Also, the mining industry that remains the main production of the country is an immense source of pride for all Chileans. Ironically enough, beside state-owned Codelco most mines belong to foreign interests but Chile is proud to be the world’s largest copper exporter.

The national sentiment and love for the flag (there is a holiday called Day of the Flag - “Día de la Bandera” – in Chile and elsewhere in the region) run deep in Latin America. Chile in particular – and you will excuse the generalization here – has always suffered from some inferiority complex towards its bigger and more buoyant neighbors, mainly Argentina and Brazil. This is partly due to Chile’s long isolation – the long strip of land by the Pacific Ocean near the tip of the continent was not an obvious destination for world travelers for a very long time.

Today, while keeping some of that low-key national character and inferiority complex, the country is mightily proud of its economic successes (at least compared to those of its neighbors and case in point of Argentina, the land of booms and busts - for instance the country’s national airline company Lan and its retail giants have expanded throughout the continent), its mining industry’s world leadership, and its political stability since the fall of Pinochet.

All of this explains why Chileans remained riveted by this story for weeks, why soon after the miners were found to be alive spontaneous celebrations erupted akin to those only seen after la Roja (Chile’s soccer national team) victories, and why the country literally exploded in joy, emotion, and pride when all the miners were brought back to the surface alive and well.

In the process, Chilean President Piñera demonstrated how he has understood Chile’s soul as he got extremely involved in the rescue efforts. First – and to his credit – he held himself accountable by saying soon after the accident that those guys would not be abandoned under his watch but then when the happy outcome was soon to become a reality insisted to be there in person for days on end and was the first in line to greet each one of the rescued miners (even the young Bolivian guy… inside joke for those who know about the acrimonious history between Chile and Bolivia).

Piñera acted as a big-time populist here. He is no Chavez and no Castro – his politics or rather his economics are exactly the opposite of his Venezuelan and Cuban counterparts’ but my god, did he force himself on the media stage – prime time, national TV, the country’s hero in short (“Heroe de la Nación”).

He has bought himself enough political credit to withstand whatever crises (economic or political) may strike the country in the next 2-3 years…

Kudos to Piñera for standing up and putting his rear end on the line as he did – but let’s also recognize how he chose to politicize the miners’ rescue.

Good Hair Day

On my way back from Asia the other day I watched Chris Rock’s documentary Good Hair (see wikipedia page) that depicts the obsession of a lot of African American women about having “good hair”. Good hair means straight hair basically and the film does an excellent job of describing everything that so many women are willing and ready to suffer though to get their hair as straight as possible. Chris Rock has that charisma, charm, and instant connection and chemistry with folks so that he manages to get both women and men, as well as celebrities and no-name people in the movie to speak with their hearts about what “good hair” means to them – those comments are both funny and moving.

Incredible coincidence - my neighbor actually works for one of those LA-based human hair (from India!!) wholesalers. What were the odds, right? He said that the movie was quite accurate – so great job, Chris Rock, and a shout to my neighbor’s company…

Rent or borrow this move if you can. It says so much about the American psyche and about the complexity of social justice, i.e. the fascination of those African American women for straight (in other words Caucasian-looking) hair.

Absolut (sic) Double Standards!!

I laughed the other day when I saw the Harvard subway station (T station) in Cambridge covered with big Absolut vodka posters. From time to time the Boston subway strikes a deal with a company to put its posters all over some given T station – and not only in the dedicated spaces. It is a little bit of an overkill from a subway rider’s standpoint but at least you can’t miss these ads…

Anyway, I was laughing when I saw Absolut going bezerk MBTA (Boston transit system) style because it made me think about how differently alcohol and cigarettes are treated in the US. Tobacco might well be another word for devil in this country…

Pointing to the addictive power of tobacco, its role in causing lung cancer and respiratory disease and other ailments such as heart disease is certainly the right thing to do. We don’t want our kids to start smoking, nor our grandmothers to smoke, nor our work colleagues, nor anyone around us for that matter because cigarettes stink. Alright…

But what about alcohol? How is alcohol less addictive than tobacco or less damaging to people’s health – to name a few possible repercussions, liver cancer, high cholesterol and heart condition due to alcohol high sugar content, and any dangerous situation that drunk folks can put themselves into?

I just don’t get it. Now, my point is not to discuss whether or not those among us who smoke or drink should be left alone as to how they choose to conduct their lives, what constitutes an addiction, or how much drinking and smoking cost to society from a public health standpoint.

What boggles my mind is just how smoking has been vilified whereas drinking is very accepted in this country’s culture. When I walk around in some Boston neighborhoods (you know who you are, Southie friends) and I see all those folks whose faces are totally ravaged by alcohol (and probably smoking too), I don’t understand how we as a society feel that it is ok. I live next door to a bar – a lot of folks are drunk when they leave. You find people going into bars and taverns at all times of day in certain neighborhoods. And this is more acceptable than people smoking a pack a day? I don’t see how.

In contrast, Europe has been as aggressive in its prohibition of alcohol advertising as it has been with smoking. Western European governments appear to consider that both drinking and smoking can have negative public health repercussions and thus, neither is encouraged – on the contrary high taxes on those products and limited advertising intend to curb consumption.

Why such a different outlook on drinking vs. smoking in the US? I don’t know... Enjoy the good times, Absolut!!