Creating Impact That Lasts

In this episode…

Nic Cary interviews Eric and they discuss the lessons learned during his career journey including:

• The importance of building inclusive environments where diversity fuels innovation and business success.
• The value of aligning business strategies with long-term social impact to drive meaningful change.
• The necessity of fostering strong relationships and mentorship to support personal and professional growth.

Sponsor for this episode:

This episode is brought to you by Sky’s The Limit, one of the largest nonprofit programs for underrepresented young adult entrepreneurs in the US. Sky’s The Limit is a quick-growing digital platform that connects entrepreneurs with their peers, volunteer business mentors, training resources, and funding.

Our goal is to develop the social capital that founders need to chase their business dreams.

To learn more, please visit www.skysthelimit.org today.

Episode transcript

INTRO (00:04):

Welcome to The First Buck Podcast where we feature stories about entrepreneurs and the people who support them. Now let's get started with the show,

Nic Cary (00:24):

Hello and welcome to the first Buck. Podcast, brought to you by skysthelimit.org. We feature stories about entrepreneurs and the people who support them. Today, we're joined by Eric Kessler, a serial entrepreneur who has started, led and advised organizations pursuing social change across the country and around the globe.

(00:42):
As a founder of Arabella Advisors, Eric has been at the forefront of innovation and impact in the philanthropic sector during one of its greatest historical expansions. While guiding Arabella. From a small startup to a company with more than 250 employees that advises on billions of dollars of philanthropic resources annually, Eric focused on helping clients achieve their philanthropic goals by devising grant making strategies, mounting effective advocacy campaigns, evaluating impact, managing their foundation operations.

(01:11):
In addition to serving as a broad range of family, institutional and corporate clients, Eric led the firm's work with clients who are working to improve our food system through policies and business investments that promote nutritious, sustainable and affordable food. Eric and his business partner sold the company in 2020, though he remains a minority shareholder and board member. Eric's previous and current board services include the James Beard foundation, the National Democratic Institute, and several food companies that are part of his private equity portfolio focused on equity, health and sustainability. Man, we have a lot to dig into with Eric today. So, Eric, we have a little tradition around here. Before you did all those things we need to learn, how did you earn your first buck?

Eric Kessler (01:51):

Yeah. Well, thanks and what a pleasure to be here. Gosh, in addition to lifeguarding and like, summer jobs, I used to go to the factory with my dad and work in the factory in the summers. My first entrepreneurial job was in college. I started a photography business. The guys I was living next to in college started a bungee jumping company in Boulder, Colorado. For real. And they let me come out with them one day and I noticed two things. One, it's a ton of fun, and two, the guys that would go out to do it, it was mostly guys, didn't have cameras. They had little insta cameras. And I happened to have, I was given as a gift, like a really nice camera.

(02:37):
So I brought my camera and I took pictures. And, the guys that did the bungee jumping company said, this is great. Do you want to take pictures every day and put our logo on it? And I said, sure. So I started my business, and every morning I'd go out to this field, and I'd stand in one place and I'd take the same picture over and over again of a guy jumping out of a hot air balloon. Tattoo, a bungee cord, and, the next night, I would have them meet me at a bar, the sink, a famous bar in Boulder, Colorado. And I would have developed and blown up these photos. Get tons of people to come into this bar every night, and you can't see these photos and not buy them. So I would. I'd have a mother's day special. It was a small photo and a big photo of you jumping out of the balloon. Cost me about $2.14 to produce. I sold the package for $25 and I was bringing so much traffic into this bar that the bar said, this is my junior year in college. They said, you've, brought us so much business this summer that your money's no good here anymore. So I had free beer and food at the sink for the rest of college. And the margins on a $2.13 cog at a $25 price point was better than I've done the rest of my career. And I got a great suntan.

Nic Cary (04:06):

That is probably one of the better first buck stories I think we've heard. So from lifeguarding to working on the factory floor to starting a novel business based on someone else bungee jumping, I can imagine some people in Boulder stringing together rubber bands and being like, hopefully this works. What could go wrong? Let's make sure we photograph it, though. All right? So from that point, learning a little bit about business, finding product market fit.

These are foundational things that all entrepreneurs and businesses have to go through. Talk to us a bit about what happens after CU, and where you started your professional career and maybe some Of those moments that were sort of pivotal, that sort of you look back on as being milestones in your early twenties and thirties.

Eric Kessler (04:49):

Yeah. So, two days after graduation, I got in the car, drove to DC. I was really focused on environmental conservation, and really passionate about the nonprofit world. So started, my public service portion of my career. So I moved to DC, worked in the nonprofit world, in environmental conservation and then sort of walked into the next phase of my career in government service. And I realized that as I was sort of doing more and more in conservation, I felt a desire to get closer and closer to sort of the halls of power and decision making and where I thought I could have the greatest impact. So I ended up having the amazing opportunity to work in government during the Clinton administration as a special assistant working on conservation issues alongside the secretary of the interior flying all over the place, through Mexico, Canada, all over the US, national parks, wildlife, refugees, trying to find new and better ways to connect conservation policy to communities.

Nerded out on that for a while. And then, as the Clinton administration ended, I was going to take a break. I'd worked on a bunch of political campaigns, and I sort of said, I'm going to take one off. So, my deal with Vice President Gore was I was going to skip that election and travel for a year and then come back and work at the White House again. So I signed up with a joint that was run by Madeleine Albright, and they sent me an organization called the National Democratic Institute. They do democracy development work around the world, which is, in many ways some of the most entrepreneurial work I've ever done. They take young political hacks at the time and send us to mostly authoritarian countries or countries that are slowly making transitions towards democracy.

And they say, go find democracy fighters and find ways to support them. And that was kind of the instruction. It's like, go. And so...

Nic Cary (06:52):

Was that funded through like, the State Department, like the peace corps, or was this done, you know, through private sector?

Eric Kessler (07:00):
A combination, but mostly state and state department and us agency for international development and a bunch of foreign governments. And, yeah, anyone who has a sort of national security or values interest in democracy.

Nic Cary (07:15):
Got it.

Eric Kessler (07:16):
So the end of the nineties was a different era. And so, anyway, so I said, I've got a year. Send me to the craziest place you can. I want to have an adventure and then come back and live my life in DC.

Nic Cary (07:29):
And where did they send you?

Eric Kessler (07:31):
Kazakhstan.

Nic Cary (07:33):
Oh, okay.

Eric Kessler (07:35):
Which I immediately looked up on a map and I was like, this is going to be great. One year, I showed up, started to get to know folks, met an incredible Kazakh woman at an Irish Bar called Murphy's. So the Jew and the Muslim meet in the Irish bar in Kazakh.

Nic Cary (07:56):
There's a joke in there somewhere, right?

Eric Kessler (07:58):
Except it's my life and so we got married, and my one year turned into about seven years. Worked all over the former Soviet Union, then moved to Cambodia, worked all over Southeast Asia, and then was in the Middle East for a few years, and that sort of put an end on my government service and nonprofit portion of my career. And then I made sort of a third transition into business. And having never really worked in business before, I started a company, which I bootstrapped with a partner for 15 years until we sold it. And still on the board, still engaged, but sort of a nonprofit phase, a government service phase, and then what has been a private sector phase. And now more of an investing phase as I find ways to support entrepreneurs more directly.

Nic Cary (08:55):

Fascinating. I've got so many questions. So these three chapters all take, I. Would say, an approach to serving constituents or shareholders a little bit differently, and maybe we can talk a little bit about what the pros and cons are from your experience in terms of how do these organizations operate effectively. And I think this is a question a lot of young, socially-valued entrepreneurs think about. Like, do they set up a for profit? Do they set up a B-Corp? Do they set up a charitable organization? Can it be a for profit with a social mission? And you've sort of worked, I guess, from three different angles in the world. Talk to us a little bit about what makes organizations effective and where do you think they have room for improvement?

Eric Kessler (09:36):
Yeah, a few thoughts. One, when I started my career in the mid, early 90s, I guess those lines you just mentioned, for profit, nonprofit, what kind of entity are we? Those lines were so clear and so thick, and now they've largely evaporated, or at least blurred significantly. So when I started Arabella Advisors, my mission, I started from a mission. My mission was to help philanthropists have more impact. And setting my personal financial needs aside for a minute, I could have set that up as a nonprofit, as a for profit, as a combination. I mean, the structures, I could have had the same impact as it were in a whole bunch of different sort of legal structures.

So I didn't let the sort of legal definitions define who we were going to be. We were defined by our mission, and after doing a bunch of research and a bunch of market research and talking to potential clients, the choice is clear to me to set it up as a for profit. But along the way, we have helped encourage a whole bunch of nonprofits that I've been on the board of, that have essentially worked alongside, in partnership with, with Arabella.

And we see more and more of that now, these sort of hybrid models where you've got a nonprofit doing thought leadership and a for profit providing services. And what I've always found interesting is when you say in my world, and sort of the social sector of philanthropists and nonprofits and do-gooders, as it were, there was a time when being a for profit had almost a negative connotation to it. And that's really changed, because a for profit allows you to do all sorts of things, including privacy and an ability to raise capital if one needs to.

And also, and to your point about how organizations become effective, I think the way we structured ourselves ensured that we held ourselves accountable. So when I entered the market with Arabella, most of our competitors were, in fact, nonprofit service providers. Similar work, similar scope of work, similar kinds of contracts. We'd compete with each other. They were structured as nonprofits. We were structured as a for profit. And I always felt that being a for profit made us both more competitive but also more accountable.

In other words, if we were having a hard time, I couldn't just go out and get a grant. We were a business. We had to make payroll. We had to. No one was just handing us cash, and we bootstrapped for 15 years. So there were no grants.

Nic Cary (12:42):

So you've hired a lot of people in your career. Talk to us a little bit about what it takes to build, I would say a team around you. What are you looking for when you do that? And how do you advise people to think about who are their first few hires? Because it sounded like you had a partner with you at the early stage. Talk to us about the first ten people.

A lot of early stage organizations just don't know how to navigate this, and, I think they make a lot of mistakes. So talk to us a little bit about what you learned.

Eric Kessler (13:11):

Yeah, those first ten people and my partner came in, incredible leader Bruce Boyd, who joined me. I think he was employee seven, but early, he was there at the beginning. Look, those first ten people were true believers. I mean, we, you know, we had nothing. I mean, you know, one of our first, one of my first employees had eclectic, experienced young guy, and he showed up to his first day asking what his job was going to be. I think his title was like head of operations or so, I don't even know. Like, it made no sense because it was everything. Everybody did everything. And I wrote his job description on a post it note and handed it to him.

I'm like, here. Like, this is all I can think of for now. The company grew so quickly and evolved in so many different ways and still evolves to this day. But those first employees, what I was looking for was weavers and dodgers. I was looking for folks that could just roll with it who sort of understood the vision and also appreciated that the path to that vision was going to take lots of twists and turns and, boy, did it. And those folks, now, looking back almost 20 years, the companies probably had an aggregate, I don't know, 2000 employees, maybe, maybe more that have sort of passed through doors.

And, you know, you know, like, if it weren't for those first ten people, like, none of those, you know, 1000, you know, 1990 people would have jobs. And so I, as hard as it is to be an entrepreneur and a founder, I bow to the folks who sign up to be, you know, employee three, four or five, supporting that entrepreneur and founder. It's not the same kind of risk, but it's risk. Like, they're risking that season of their career on this person with this crazy idea and no money and just a hope and a prayer.

So to me, those are the heroes of entrepreneurship. Those first dozen folks that sign up.

Nic Cary (15:29):

I love that. Yeah. Those first people that take that leap of faith, they end up having such extraordinary experiences. When it does work out, they learn so much, they have a lot of latitude and a lot of responsibility earlier that would take a long time to acquire in a more traditional career path.

Eric Kessler (15:46):
And then they get five promotions in six months. Oh, you were. Okay, great, let's go.

Nic Cary (15:55):
When we surveyed our entrepreneurial community at Skysthelimit.org, the two reasons a lot of people didn't feel confident in starting businesses were a lack of know-how and just knowing where to start. And the second was a lack of role models. Like, they didn't really see anyone like them doing this. And they sort of need people to be encouraging of them. So I'm interested to hear from someone that's had just such a varied career. Who are some of those people that helped you along the way and provided you guidance?

Eric Kessler (16:50):
Yeah, I mean, a few specific people come immediately to mind. So first, my dad helped run a family business. It was a manufacturing company in the auto industry and I mentioned earlier I had the opportunity to get up in the morning and the summers and go to work with him, work in the laboratory at this factory and just learning by osmosis. Not the business per se, but really what I learned was relationship management. And I'm a relationship guy. Like, that's how I sell, that's how I build teams.

I'm not a process guy. I'm not an operations guy. I'm a relationship guy. Growing up, seeing how the boss at a factory, you know, knew everybody's name and everybody had a personal relationship, and everybody felt a commitment, not just cause it was a great business. People had some of the best benefits in the country in the seventies, eighties and nineties, which is sort of unheard of now.

But there was a real, very personal relationship with senior management, who happened to be my father and others in the family. And so that was, to me, that made me a relationship guy. Just observing that and if you're going to work in professional services or in government or in the nonprofit world, you have to be a relationship person.

I mentioned my partner, Bruce, who joined me when I joined the business. Bruce and I are very similar and very, very opposite in a lot of ways. He was sort of my ingest, you know, the yin to my yang. And I can be sort of excitable and bright shiny thing. And what's next? And Bruce is sort of the calm. Like, let's think about this. Not a nostalgia way, but in a, like, extraordinarily a great partner. And I just. I really believe in having a great partner. When I started with those first ten people who were all really young and energetic and thoughtful and incredibly smart, Bruce was a little older. He came in as sort of the older statesman. And so I learned a ton from my partner Bruce, about, sort of catching your breath, like, taking a beat and thinking things through and, you know, ironically, of course, having him there enabled me to be the excitable person. So I internalized it maybe a little too. Late because he was like there to hold me back.

But uh, Bruce and I were great partners. And then something that's been extraordinarily valuable to me and I think would any entrepreneur is peer networks. So I have been a member of YPO for many years. There's EO, there's vistage, there's dozens of different kinds of peer networks. But to me, for your listeners who aren't familiar, YPO, organization of founders and entrepreneurs of mid size large businesses and you're part of a chapter, but then you get put in a forum where you're put in a group with five, six, seven others who aren't in the same industry. They should know nothing about your industry, but they're all successful business people in their own right. And these people become family, and they know everything about you, about your business, about your family, about everything. You meet every month for 4 hours, which maybe doesn't seem like a lot, but look at your calendar. Like, what's the last thing you dedicated 4 hours to every month?

And so I'm in this forum, and I still am years later with this group of incredibly talented people in real estate development, in tech development, in venture capital, people who I would like to think that I would have been friends with had I just met them along the way, but I never would have met them. So peer networks as a form of mentorship, there's nothing better. And so I just really encourage, when I mentor entrepreneurs, find your peers, and there's networks that you can join or create your own peer network.

And I learn more from my real estate development forum mate who teaches me about people and about finances and about things that aren't necessarily directly relevant to my work today, but are so incredibly valuable as lessons and so peer networks.

Nic Cary (21:13):

So I think a lot of younger people in the world today sort of feel a grave sense of anxiety about, the challenges that are in front of them, whether that's economic mobility, the environmental challenges, and climate change, whether that's food and health issues that seem to be maybe exaggerated or more chronically problematic. What are the areas that you feel, young people should be concentrating their energies on if they're going to go solve some of these big challenges? How can they think about where to go first? And where do you see the big opportunities? Because anytime there are a lot of obstacles, there are also incredible things to achieve, along those difficult paths. And where do you see the opportunities for impact in the next decade.

Eric Kessler (22:00):
Yeah. First I, you know, pick an issue. I mean, there's so many challenges and so many opportunities from improving education to, uh, entrepreneurship to environmental crises to health crises. So you can't go wrong. And what I tell people first is if you're going to focus your energy, whether it's through your business or through your resources or volunteering, first pick an issue that you're passionate about that has some very personal connection to yourself. To me, all of these issues, and all the issues we face today, come down to, in one way or another, economic mobility and economic development.

And so, so many of the solutions to intractable issues, whether it's a climate change or healthcare access or education or anything else, the root challenge of it, if not the root solution, is improving the economy of the people being impacted by that issue, improving their economic position.

Nic Cary (23:20):
Yep. So I think, last question and we'll sum it up here. Starting your first thing can be really intimidating. So maybe what advice would you give to our listeners and the entrepreneurs are at the beginning of their entrepreneurial journeys to think about how to manage some of the stress and responsibility that comes with starting your own business.

Eric Kessler (23:44):
Yeah, I do probably two or three calls a week with new entrepreneurs, starting a new thing, looking for ideas. And one, I do caution them about the real mental health challenge in being an entrepreneur.

I fear that a lot of entrepreneurs sort of watch shark tank and they're like, oh, like, I'm going to start today and tomorrow I'll be on tv and the next day I'll get a check from Mister wonderful and then I'll be off to the races. And obviously it doesn't work that way.

And I think one really has to. On top of having a good idea, on top of being able to sell, on top of being able to build a team, you've got to prepare yourself for the lows. It's always fun to think about the highs and you just got to be ready for the lows.

And what happens when you're struggling to make payroll? What happens when you've borrowed money from a friend or a family member and you're not in a position to pay it back? What happens when, and hopefully none of that ever comes to fruition, but you'd be crazy not to think about that and be prepared for that. And then the other thing I say is that, if you haven't done a ton of market research before you started, you're already done.

"If I build this, they will come mentality" that I hear from so many is sort of absurd.

I'm sure that has worked for plenty of rich, famous people that we've heard of. But generally speaking, like, if you don't know everything about your market and if you haven't talked to would be customers ad nauseam before you start, then you just tied a hand behind your back.

And then when I speak of business classes and a student says, what was your biggest mistake? What's the one thing you do differently? I always disappoint them when I say, CRM systems, they're like, what?

Nic Cary (25:56):
Relationship management, right?

Eric Kessler (25:58):
What? I'm like, yeah, like databases, like what we used to call rolodexes. I didn't have one. And I'm in a relationship business. And if you can't manage your data and manage your people, and they're always sort of deflated by that answer. They wanted some wisdom of, like, you know, impress the hell out of a billionaire. Like, no, like, just get your data straight. But those are some of the things I say to entrepreneurs when I mentor them now.

Nic Cary (26:27):
Many pearls of wisdom in there, Eric. Thank you so much. So, from the early days, you know, starting off as a photographer in Boulder, Colorado, to doing a tour of duty across the world. Ccoming back to Washington and serving in the Clinton administration and becoming an entrepreneur and founding an exceptional business there - are a few things that really stood out to me across your story arc.

One of the things that was really clear is that you got to have a mission you care about. That was something you talked about. And you got to also look for people that are adaptable, especially in early businesses. There's going to be a lot of volatility, uh, and there will be stress, I think. And it's important to acknowledge that finding great people on the way to help you, like Bruce did find the yang tier. Yang, I think that's so important. A lot of people, they go and seek advice, maybe sometimes from the wrong folks. Your mom or your dad really care about you, and they want to see you successful. But you need to have an adversarial conversation about your business idea, too. It needs to be criticized. It'll get better by having different perspectives. And sometimes going to those even closest to you, even though they're rooting for you, may not be the best ones.

And you talked about how important it is to go validate your idea before you go work on it. Don't just build something, go talk to customers. And that's always been something I love to reinforce. Is your customers, your best teachers, go interview them, go talk to them. And it's so funny you talked about a CRM because my very first startup was called Pipeline CRM, and we built a customer relationship management software to try and compete with Salesforce. And that was the first thing I ever did because I understood the need for that too.

I really enjoyed this conversation, Eric, thank you so much for joining us. It's been absolutely a pleasure. So, for everyone. At skysthelimit.org, we connect underrepresented entrepreneurs with volunteers from all kinds of corporate partners for free, one on one mentoring. We provide business guides to all of our members and free monthly funding opportunities. So if you like what you heard, please subscribe today and share this podcast. Thank you very much.

Eric Kessler (28:22):

Thank you so much for everything you do at Sky's the limit and for the opportunity to join you.

Nic Cary (28:26):

Thanks, Eric.

OUTRO (28:30):

Thanks for listening to the First Buck podcast. Don't forget to join the community of underrepresented entrepreneurs and their supporters by signing up at skysthelimit.org. Click subscribe and we'll see you next time.