The Courage to Take the First Step

In this episode…

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

• The importance of taking bold, calculated steps to pursue meaningful opportunities despite uncertainty.
• The value of aligning personal values with business goals to create impactful and fulfilling ventures.
• The necessity of resilience and adaptability to overcome challenges and thrive in dynamic environments.

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 (00:05):

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 (00:22):

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 Howard Fischer, Co-Founder and Chief Evangelist of Gratitude Railroad. He's also the Founder and former Chief Executive Officer of Baso Capital Management, LP and Hedge Fund Management Company. Over his 30 years at the firm, he had led its marketing convertible securities, hedge funds, SPACs and Arbitrage Fund and more. Howard serves on the boards of 1% for the planet, the Carbon Underground, and Garrison Institute's Compassionate Leaders in Finance program. He advises BrightEdge the investment fund of the American Cancer Society. Among other things Howard has also served on for-profit boards and nonprofit boards, including Done Good Builders Fund, Atlas Impact Partners, and Black Dirt Capital. So I'm very excited to have a little chat with Howard today. Howard, you've had an extensive career across both the for-profit, nonprofit finance space and more, and you look at a lot of startups, but we got to ask you a question. We have a little tradition around here. How did you earn your first book?

Howard Fischer (01:28):

Well, searching my memory banks, I think the first thing I did was sitting up a little stand in front of my house in a small town in Long Island, New York, and I sold creepy crawlers, which for people who might not know what that is, that was a little hit that you could buy where you melted rubber and put it into the form of bugs and insects and little creatures. And I was always looking for ways to make money and that was probably the very first one.

Nic Cary (01:59):

Oh, I like that story a lot. Now we share something in common because I think my first entrepreneurial endeavor was also on Long Island and I used to go collect clams from Gardener's Bay and sell them to our neighbors. And back then the North Fork wasn't as fancy as the South Fork and used to have these different clients come through with very different levels of expectation with their seafood. But I remember in Greenport they used to sell a T-shirt that said in Greenport Sushi is bait, which I think spoke a lot to Long Island and the different forks. Anyway, sorry, just not too often we have a guest with something in common with, so you sold creepy crawlers that were melted. Rubber built an empire from that onward. Tell us a little bit about your next step in sort of the business world. I mean, I know you went to university, but think, talk to us a little bit about the investments you made in yourself and what may be the dirtiest business you ever had your hands dirty in as a young man.

Howard Fischer (02:59):

Dirtiest business.

Nic Cary (03:00):

Well, I always like the question, what's something your hands

Howard Fischer (03:02):

Ethical or is that getting my hands dirty?

Nic Cary (03:05):

Your hands dirty.

Howard Fischer (03:07):

Again, as a young entrepreneur before university, I did a lot of snow shoveling. That was an incredibly lucrative business at that time. Yes, I delivered newspapers at the time that the print came off on your hands. So that was also a very dirty business in my early years.

Nic Cary (03:29):

Alright, so from creepy crawlers to delivering newspapers to being the guy on demand when there was a snowstorm. Kind of talk to us a little bit about maybe the early professional career that you experienced.

Howard Fischer (03:42):

So after undergraduate school where I studied accounting and finance, my goal was to seek wealth. I always talk to people, young entrepreneurs, there's nothing wrong with wanting to get rich, even if you have an impactful positive goal. I think getting rich as a goal with ethics and values is okay. The first job I took out of school was in public accounting. I call that a bit of a distraction. It was the first easiest job I could get. Spent a few years in that and then I read in the newspaper about the formation of a hedge fund business, which was really my interest, finance and investing. I've been studying investing my entire life. Actually another early career I had, I wrote an investment newsletter about collecting postage stamps also early in my life. So anyhow, there was a gentleman in my town who I'm still in touch with all these years later, who was launching a new hedge fund business, which I read about in the Wall Street Journal, and I called him up hoping to be interviewed and he actually turned me down and said, we're taking our team from our current firm. The next day he called me back and said, the firm isn't allowing us to take the other people. Let's have an interview. And at the time I was going to NYU business school at night and I was taking a course in merger arbitrage from a guy named Richard Perry, who's a well-known and highly successful risk arbitrage. The firm that was being formed was specializing as risk arbitrage and convertible securities arbitrage, very related strategies. So in the interview process, because of the course I was taking to answer the questions well enough to get the job.

Nic Cary (05:19):

Good timing. Yeah. This is a good question that I wanted to ask you. A lot of young people, I feel like the way they find business opportunities has changed quite a bit. You might've used to look at the classifieds or maybe have an opportunity through a family network. What advice do you give young people about where to be aware of opportunities in the business world today? How would you advise a young person that doesn't know where to start?

Howard Fischer (05:44):

That's an interesting question. In my world, one of the things I'm looking as chief evangelist, not only for gratitude railroad, but for impact writ large. I'm very focused on opportunities that open up in this space. I do speak to a lot of young people about doing that and there are so many of them. It's hard for me to keep track actually, and I repost lots of jobs on my LinkedIn and so I offer that opportunity to everybody who speaks to me or now people who hear this follow me on LinkedIn. If you see a job posting of interest, let me know. At least half the time I have a contact at the company, obviously I need some kind of proximity to the applicant to make a recommendation, but I'm open to doing that and that's one of the things that I speak to people about a lot.

Nic Cary (06:28):

Great. That's really good. And I think, yeah, LinkedIn is definitely a good place. A lot of people post opportunities there and are helping other people find and discover opportunities through their networks. That's a great,

Howard Fischer (06:39):

But LinkedIn, as we know, there are a lot of competition for those jobs and I think once you find your space, there are ways to be proximate. Go to meetings and conferences and listen to webcasts and see what rises up. If you read the newspaper and there's a company that piques your interest, reach out to them as well

Nic Cary (07:00):

And you miss a hundred percent of the shots you don't take. So I think having some of the courage to do that and making a process around it, it can be a little difficult to be rejected from things. But as you mentioned, you were rejected the very first time and then went back and established a lifelong partnership and still seem to have connectivity with that. So let's talk a bit about that opportunity and you inevitably would've had to have made some very complicated financial decisions about how to deploy capital and take on risk. Talk to us a little bit about how you get comfortable betting like that or strategically putting capital to work and giving a bit of a maybe framework for younger people to think about how to also make similar investments either in themselves or in the businesses that they're starting. A

Howard Fischer (07:45):

Couple of things there. One, just to be semantic, which I tend to be, I don't like to use the word betting.

Nic Cary (07:51):

I

Howard Fischer (07:51):

Like to use thoughtful allocation of capital or investing. I would say in all fairness to the risk that takes to be an entrepreneur to some extent, the investment strategies that were the core of my career before I became an impact investor were really what I would call arbitrage, extracting value from securities that the marketplace overall didn't understand and therefore to me, the risks were minimized. Now, some people would suggest that the risks I took were high. For example, in my convertible arbitrage, my convertible hedging business, there were times we were leveraged 15 or 20 times, but based on the analysis and based on the nature of the securities, the actual risk was significantly lower. Some people find that to be very, very high. What I find really differentiates people who move forward and attain success and reach their goals is the willingness just to step out. It's a test to me. If you're willing to do X, even though everyone was telling you not to, even though it's not conventional, then you can make that change. So many people stay in jobs and careers that aren't fulfilling and aren't challenging because they're afraid of quitting. They're afraid of putting their entire with their net worth or their time at risk. So the most important thing is to take that step. That's a differentiating factor in my mind.

Nic Cary (09:20):

Thank you for that. Yeah, I think that sort of courage to get out there and make one's uncomfortable, be persistent. Those are things we've witnessed and seen in a lot of our interviews. So speaking of maybe taking big next steps or pivoting, you have this career in the for-profit space. Talk to us about switching into an impact investment role and what sort of motivated that change.

Howard Fischer (09:40):

Alright, and again, just to be semantically, quibbling gratitude Railroad is a for-profit business seeking market rate returns by investing in businesses whose product or service benefits the planet or social justice issues. Without going into too much detail, the financial crisis in 2008 was a major impact. It was about the fifth financial crisis I had dealt with, but it was amongst the most damaging to my net worth, to my energy, to my ego, to my spirit, and I had a business that shrunk by 90% as a result of the financial crisis. I had to lay off 75 of 50 of 75 employees, and I was really concerned about the state of the world and what would happen, and I entered a state of confusion and seeking and depression, and I found myself fortunately accepted into an educational program at Harvard University called the Advanced Leadership Initiative for people at a later stage in their careers who are considering some kind of change and wanted an educational opportunity to facilitate that change.

(10:52):

That was in 2013. I actually ended up staying at Harvard for three semesters into 2014, and it was the most incredibly powerful, transformative growing year of my life. The goal of the program is to identify something to dedicate the rest of your life to that, for most of us better serves the Planet Humanity Society, rather than being a hedge fund manager just making money for myself and other people along with another fellow in the program, my partner in founding Gratitude Railroad, Eric Jacobson, we began to explore the thing called impact investing. And what we saw back in 2013, which was not perfectly true to our limited purview, but still it was relatively accurate, was that impact investing lacked what we felt was a Wall Street attitude, a professionalism, a risk-taking appetite as we spoke about lots of people who cared, who like to go to conferences and write papers and go to meetings, but nobody was writing checks.

(11:52):

Again, back to your original question, writing a check is the biggest risk, especially into something that's not blessed by Goldman Sachs or isn't a liquid index based equity investment. So Eric and I felt we could do that and we decided that we've created an organization based on the premise that one or three that of the capital pools in the world, the philanthropic pool, the government pool, and the commerce pool, most of the money is in the commerce pool and we need trillions of dollars to solve these problems. So we wanted to find a way to capitalize and to attract that pool of capital. We felt that capitalism provided a level of efficiency and responsibility and accountability that didn't exist. With all due respect, even to skys the limit, not-for-profits have their role, but there's a challenge without that kind of accountability. I have this conversation lots of times with Eds and CEOs of not-for-profits about the challenge of raising capital.

(12:49):

Every time I make a donation, all that happens is I get a thank you within a request for more money and the control. If you think about Anand Jarrah hard's book winners Take All and how many philanthropists try to impose their values on an organization where they may not have the exact expertise or mission at heart. So government is in wherever you are, is inefficient and manipulable in some cases corruptible. So by creating a business that had the focus that we led in our private businesses, Eric was in the private equity business before he went to the Advanced Leadership Initiative, we wanted to create an opportunity to introduce to our peer group that idea that they can invest with impact, they can make change, they can make market rate returns, and they can bring themselves some pride and joy in the work that they do.

Nic Cary (13:39):

Right. Great. Thank you so much for sharing more about that. Yeah, there's a whole other podcast someday to create called Philanthropy Confidential, which will just be really getting to the bottom of all of these misalignments that cause all kinds of mal-investment. And I think there's very valid criticisms of the model. I mean, one of the things that I've always tried to bring to the organization as a very market-based sort of approach to it, and sometimes it is challenging especially to even recruit people to work in these types of organizations that are just not used to an accountability structure that is just focused on results. And so there's a lot to improve and to unpack there, and we may have to do that at some future state. One of the things I wanted to ask you, you've hired a lot of people across your career, early stage entrepreneurs frequently or getting advice from a lot of different places, but building teams can be tough. What have you sort of learned that you would say is reliable guidance for how to think about hiring and when to hire and how to assess and evaluate talent?

Howard Fischer (14:49):

No, there are two parts that for me, let's talk initially about the founder or the leader for me making decisions to invest directly into early stage companies. And I like to speak directly to the founder, imperf as possible on Zoom otherwise, and really get to understand why they're doing what they're doing. I want to feel their enthusiasm and passion for the work. I also look for realistic expectations. If every question is answered with, yes, I'm really good at this, yes, this is not a problem, I see no risks to the business, that's a real turnoff,

Nic Cary (15:31):

That's a red flag.

Howard Fischer (15:32):

Honesty and integrity

(15:34):

As far as team building, I have to admit I'm not all that good at that myself. And I actually have a big gratitude railroad offsite tonight and tomorrow. And in my opening remarks I'm going to mention what a great job that the CEO, the founding CEO made in picking his team. He's done an amazing job. I hired people and for me, mostly the hiring I did was in the hedge fund business. You either can make money or you cannot, and you test is really the first day you come to work, it's a lot easier to, it's a very sort of black and white calculated decision making process.

Nic Cary (16:11):

Right. Did you make money today? No. Okay. Not a good day.

Howard Fischer (16:15):

If you don't make money and you don't learn how to make money, then you need to find another job.

Nic Cary (16:20):

Yeah. It's so funny. It was one of my favorite questions. I would come into the trading floor of the company every single day, 7:00 AM and that was the only question I asked, are you making money? And then the rest of it was like, okay, we'll check in later. Sorry to hear about your issues, but the first one is the most important one. So it was interesting, you talked a little about finding that opportunity through the Wall Street Journal, but I was curious to hear your thoughts on how young people and founders can surround themselves with good advisors or coaches, whether it's a mentor or a more structured relationship. How does gratitude railroad help that's in investments you make and what role do you see yourself as an investor playing in being there for founders and what works and what should founders be looking for?

Howard Fischer (17:11):

That's a great question. To some extent, the core principles of Gratitude Railroad are built on some of the principles of the advanced leadership initiative. And there are other programs like that at other universities across the country as well as outside the country. And the idea is that there are many people, again, like Eric and I and the wonderful people who serve as our stewards, who have time, experience, connections, capital and passion for these causes. And what I find is on an informal basis, as founders go through the process, there's a relationship that gets struck either based on the experience and business knowledge of one of the people in the Gratitude railroad community or simply some kind of social emotional connection. And just about every founder that we invest in or fund manager that we invest in ends up finding somebody within our network that they build a relationship with.

(18:07):

Sometimes it's a weekly call, sometimes it's a monthly call, sometimes it's when necessary. So I believe, and I'm not a very planned structured person, that those things happen naturally. You meet people, you find connection, and then the opportunity indoors. The people that I tend to connect with are ones that are open to listening to critical questions that go to the core of what they're trying to do. I've had many conversations with people where three months later they call me back and say, what we discuss caused this business to change in these ways. And so for me, I resonate with people who are open to hearing why people don't think what they're doing makes sense. But for other people it's other

Nic Cary (18:54):

Things. I think it's really poignant. One of the things that's tough for everybody, I think, and hopefully you get better at it, but it'd be hard to be criticized or have someone tell you that the way you're thinking about something, it may not work. And I think finding your blind spots and learning about those things before they become catastrophic weaknesses is so important. So being open to customer feedback, to criticism about your business model or something you've developed or built and improving it is hugely important in business because your customers are going to be your best teachers. Your investors are going to have things that you're not seeing, and they have experience to assess those. And if you're not open to doing some of that stuff, you may find it to be a very, very lonely journey with no customers and no investors at all. So great. Well, thank you for sharing that. The impact investment, I would say industry seems to have really blossomed and then taken a step back. What is at State in 2024? We're seeing, I would say a little bit of there was a lot of momentum sort of in 20 21, 22. I don't know if it feels like it's taking a pause a bit or do you think it's more important than ever? Give us a little state of the union on it.

Howard Fischer (20:12):

That's a really deep and interesting question. There are many people, people who have been engaging in what we'll call impact investing, and some people would suggest that that's the successor to ESG investing

(20:28):

Who lamenting the lack of what they call success. And therefore they are discussing the next level, which they're calling systemic investing, which is a wide ranging thesis around combining philanthropy policy investing from concessionary capital through to full profit seeking market rate return seeking capital, and how you measure success on why are people questioning the success. We haven't changed the world, right? Donald Trump is still running for president. We don't have a price on carbon. A lot of people in this country don't believe that the climate is changing. A lot of people don't believe that there are social justice issues needing addressing. We do have a very, to me, irrational, hateful pushback against ESG and DEI for various reasons, including some that are legitimate that maybe some of these pressures went too far. My couple of reactions to that. First of all, as I mentioned to you, my hedge fund career was based on extracting value from misunderstood securities.

(21:42):

So I'm happy if people don't want to invest in things that we know will do well because the climate is changing, because the population is diversified, because social justice is right. That's great. There's more room for me. It also means to me that the work of gratitude railroad is that much more important. We're committed, we're dedicated, we're growing. And just because if we have the opportunity to step into the breach, and to some extent as the industry grew over the last 11 years, there was more competition. That's great. I tell people that if Ratitude Railroad goes out of business because we don't need to have impact investors because everybody from mobile, what's that?

Nic Cary (22:25):

That's mission accomplished in some ways, right?

Howard Fischer (22:26):

Mission accomplished. It's the same thing. If we avoid the worst ravages of climate change by 2030 or 2050 and people say, see how it didn't happen? And I know it's because of what I have to do.

Nic Cary (22:37):

Yeah. I don't care what you could sleep at night with that.

Howard Fischer (22:39):

Right, exactly. So it makes it that much more important. And I also find the idea of systemic investing. It sounds great. It's incredibly idealistic for people of great wealth or people who may control a region like a small farming area. Maybe it works. But for people like me, I am happy waking up for every day I apply what I call the starfish parable, the basic idea that I'll tell very quickly. No, I don't know that. Okay, so let's say a grandfather and his granddaughter are walking along the beach as far as they, I can see they're a starfish, wash up, drying in the sun and dying. And the little girl, every few steps, roses one into the water and then walks a couple steps, stores another one into the water, and the grandfather says, what's the difference? Look at all these starfish. It doesn't matter, does it?

(23:31):

And she says it matters to that one. So whatever gradual Ratitude Railroad can do, each company that we can stand up, each person that I can convince to act thoughtfully in their investing, whether they do it with us or they do it someplace else, is a little bit, it all helps. And over time, I've spoken to literally through my work at grad, we wrote thousands of people about this. We have moved many hundreds of millions of dollars into impact investing. Everybody who engages, who is further supported and profited and enjoyed the work will get other people to do it. So I think now is the time for organizations like Gratitude Railroad and Individuals, whether they're entrepreneurs that sky's limit is supporting what people with capital, like the gratitude railroad to stand up and do what's right. And so to me, yeah, there's a recast. There's a lot of greenwashing or let's say, what do they call it now? There's a new term for it because they're hiding what they're doing. They're still doing it, but they're not reporting on it. Most people know this is right. So I think it increases my economic opportunity, increases my importance, and BOLs me to be more active in my evangelism.

Nic Cary (24:49):

Great. Thank you very much. That was extremely helpful to hear a bit more about your perspective on it. I noticed you got a bunch of books on the shelf behind you there. If you had to pick one off and hand it off to a young entrepreneur and say that this book helped me, which one would you hand over and why?

Howard Fischer (25:06):

Wow. Wow. I think for an entrepreneur, a beautiful book is Let My People Go Surfing by Yvonne Sard.

Nic Cary (25:15):

So good. Yeah,

Howard Fischer (25:16):

That's a classic. Another book, I think that there's a book that has been deeply important to me later in my life that had gifted over 80 times. I supported a movie about the book called The Book of Joy, which is about a week that the Dalai Lama and Desmond Tutu spent together. And I think when you're an entrepreneur and there are many dark days, having the knowledge and the energy and the spirit of those two men who faced incredible challenges in their lives yet rose to very successful levels of giving and philosophy and values, I think is very, very helpful too as an entrepreneur.

Nic Cary (25:57):

Good. Okay. So let my people go surfing in the Book of Joy, the first one about the founding of the Patagonia and the other characters in California that were sort of pioneering a work-life, balance and purpose-driven businesses. And it was interesting, a bunch of those guys that knew each other. It was like the North Face guys, Patagonia and these dudes, they were so remarkable entrepreneurs way ahead of the curve on climate change and conservation work. They've done some extraordinary stuff. Then the Book of Joy will be one I need to go pick up. So I appreciate that recommendation. Howard,

Howard Fischer (26:32):

Lemme say, I think it's interesting too about Patagonia and so many of these other companies from that ilk, whether it's Ben and Jerry's or traditional Medicinals, these companies were founded by people who had a deep belief in passion for the product and the way their product could serve humanity. And having that inside of your business with that dedication to its work, developing a solid business that's going to make money, but is so entwined with your values, attack me to say, when you love it, it's not work. When you believe it deeply that way, it may still be work. There's a lot of hard stuff to do when you start a company, but if that's part of it and it's in you, the likelihood of success is much higher.

Nic Cary (27:21):

And I think if you really look back to some of the legacies that these businesses leave, they're really meaningful. It's not just like, oh, I worked at Enron and God, that was such a mess. And you have this sort of tarnished thing. I mean, when you lie, when you take short-term gains, when you cheat the system, it leaves a stain. And the alternative is that you leave sort with this movement like you described, almost like karmic benevolence, saving the starfish one at a time because they matter to those individuals. And if you do enough of it, then it creates some momentum. So I like that a lot. You mentioned, and you've dealt with your own fair share of adversity through the great financial crisis personally. And then I'm sure in other ways building and founding businesses can be very stressful and scary. What advice would you give to your own founders that you invest in, or what advice do you give them for how to manage some of the, I would say stress and adversity that comes with being the person in the seat?

Howard Fischer (28:26):

Self-care is very important. I have found the first time I got fired, second, the second time I got fired, it was pretty public and disappointing. And I was counseled to make sure I work out every day. I'm an avid cyclist and work, and life always gets in the way of those activities. I have the privilege now of obviously making them a priority, but I think something like that, having some kind of physical activity, I think being in nature is very important. For me. Doing something actual meditation or something meditative is important. And I think really another thing that, and these are things that I learned later in life that are hard to learn. You were not your company, even though what I just said about alignment and mission and sort of inculcation into you, or you will always be you if the business succeeds, if the business fails, you'll still be you. That's sort of the message of the book, A joy and the core of much Buddhist philosophy.

Nic Cary (29:29):

Yep. Alright. Well, Howard, thank you so much for your time today and teaching us a bit more about your personal entrepreneurial investment and impact career. We have a lot to cover in the summary, so I'll try and be hopefully brief. But I think one of the things that stood out to me was sort of this acknowledgement of moments in time where you can be purposeful and impactful and still seek profit and do no harm in the world. And that combination has potential to really move the needle in a powerful, positive way. And I think it is worthwhile to do those things. And I think you said something that was really good, which is around how the market opportunity when big problems are not well enough understood, creates a place for you to insert capital knowledge, experience, and propel those ideas that are not yet understood well enough today.

(30:29):

And I'm excited to see the work that Gratitude Railroad is doing in those spaces. So find 'em online, you can search 'em as well. And then in summary, I think one of the things that came through is it's not going to be easy to build and found and run companies. So take a little time to find that prescription that works for you, whether that's internally through meditation or getting outside going for a walk, finding a hobby that gets you moving. It's not rocket science, this self-care stuff. If you listen, people have been trying to tell us for a long time that we need to do these things. And so I think with that, we can conclude today. But thank you very much for joining us on the Skys Limit podcast. So we connect underserved entrepreneurs with volunteer business professionals for free. One-on-one mentoring. We also provide business guides to all our members and monthly funding opportunities. So if you enjoyed what you heard today, please share this podcast and also subscribe to the podcast. So thank you very much, Howard.

Howard Fischer (31:30):

Thank you. Appreciate it.

OUTRO (31:35):

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