Speaker 1The idea is that simple, your degree and to give at least 5% of your promote of a fund or fund series, it doesn't even have to be the entire firm, to philanthropy, whether it's housing, whether it's health, whether it's education, whether it's homelessness, whether it's climate, whatever the passion is from that particular group.
Speaker 2I'm Ted Seides, and this is Capital Allocators. My guest on today's special episode is Joel Hulsinger, co-head of Aerie's $50 billion alternative credit strategy. In addition to his long and stellar career in the credit markets, Joel spearheaded the launch of Promote Giving, a philanthropic initiative similar to Warren Buffett and Bill Gates' Giving Pledge, designed for alternative asset managers. Our conversation covers Joel's path to engaging in philanthropy, starting from humble beginnings to now making grants. Joel is the founder and CEO of Promote Giving, a non-profit, non-profit, non-profit, non-profit organization that has invested over $50 billion in the U.S. and the U.S. in the U.S. in the last five years. He's also the founder and CEO of Promote Giving, a non-profit, non-profit, non-profit, non-profit The proposition of Promote Giving is simple. GPs commit up to 5% of their promote on at least one fund to give to a charity of their choice. With 10 signatories and more than $35 billion in AUM pledged to participate already, Promote Giving is quickly growing the movement to managers across asset classes. It's the giving pledge applied to investment firms, and I can't imagine a better use of this space than to spread the word. Learn more and pledge to give at PromoteGiving.org. Before we get going, it's travel season, partner meetings, board meetings, the capital allocator's CIO summit, Omaha for Berkshire, and Milken. Across planes, trains, and automobiles, you're bound to run into a few snacks. When they're unavoidable, I try to remember Will Gadara's story of the pilot who lifted everyone's spirits by bringing families into the cockpit. But it's not always easy, which leads to my most recent pet peeve. I was on a flight with some unfortunate delays. We were scheduled to land from a cross-country. We were scheduled to land from a cross-country journey at 11.30 p.m., but got diverted from New York to Philadelphia because of weather at just the wrong time. After a gas-and-go stop that took about an hour, we finally landed at 3 a.m., and at that time, there's only a scant crew working at hangars, so we waited another hour on the tarmac. None of that was anyone's fault, but after a long flight and equally long day, you can imagine everyone was ready to go home. All the passengers queued up to depart one by one in an orderly fashion. It's actually uncanny how respectful people are when getting off planes. But there's a moment when it's your turn to get moving, and on this particular flight, after eight and a half hours, the person in the row in front of me seemed oblivious to the cadence of the queue. When it was his turn, he arose, seemingly clueless, and forced everyone behind him to wait. Of course, this wasn't. It wasn't just a grab-your-bag-and-go. Two bags, maybe three, come down from above, then he pauses to put on his jacket, then reorganizes his bags to put a backpack on top of his wheelbag, and then, without as much as an I'm-sorry, he slowly started walking off the plane. Not a single movement in his deplaning occurred until after the person in front of him had started walking. So there you have it, my new recent pet peeve. Don't be the only one. Be that person who isn't ready to de-board a plane when it's your turn. It's just not that hard. And thank you for spreading the word about my most recent pet peeve, which you'll only hear by tuning in to Capital Allocators. Please enjoy this conversation about promote giving with Joel Holsinger. Joel, great to see you. Great to see you, Ted. Well, this is going to be fun to dive into what you've created with promote giving. To start, why don't you give a little perspective? What's your perspective on your background and path into this charitable endeavor?
Speaker 1I love the use of the word path from that standpoint. Whenever I interview anybody, the question I always ask people is, "Where did you grow up? What did your parents do?" Because I find that you can learn so much about somebody by answering of those questions and seeing where it goes. For myself, I was born in Eugene, Oregon. I went to high school in Boise, Idaho. We moved over there when I was 13. My dad was a pastor. Not only was my dad a pastor, but my grandpa was a pastor and his dad was a pastor. So I broke the chain. My mom, in her early 30s, went to college to get a degree and she went into nursing. She ended up doing open-heart and OR nursing. I had four or five aunts that are nurses and both of my grandmas were nurses. I grew up within that world. My sister is CEO of a division of Adventist Health, which is a healthcare company out in California. So that part of the family is a part of the family. Family kept going there. We always drove to our holidays. We always drove to our vacations. We went to the KOA campgrounds. We did all those other things out West. I never went East of Mississippi until after college. The first flight I ever went on in my life, I was 15 years old. I went to visit my sister, who was five years older, who was at college in California. When I went to visit Tammy, I got off the plane and I said, "I'm going to college in California. Why have you kept this from me?" I ended up going to college in California. We paid for our own college. I worked through college at Sears. But I fully planned on being an engineer. I was going to get a job at Micron in Boise, Idaho. That was literally the life plan. That's how big my dreams were. After I had gotten through all of the physics and calculus classes, we got to the application side. And about halfway through, I said, "Yeah. One, I don't want to do this the rest of my life. And two, I'm going to be a very average engineer." So I changed to finance, mainly because I was good at math and science. No idea what I wanted to do. I ended up doing an internship, if you remember Dean Witter. And they had me cold calling people to come to some seminar. I was like, "I am not doing this." Then I ended up getting an internship with Citigroup. I was there not even two weeks and I said, "This is what I want to do with the rest of my life." I absolutely loved the puzzles of investing. Even to this day, I swear to everybody, I will never retire. I absolutely and totally love investing. I'm still the deal junkie of deal junkies. If you fast forward, I ended up with Citi. I thought I was going to retire at Citi. I was making more money in my first year than my dad had ever made. They promoted me a whole bunch of times. I loved it. I was in the rotation program across some of those groups. And I got heavily recruited by a guy who left our group. I said no three times and I eventually took an interview. I was young and dumb, but I was smart enough to say, "This is another level." It was some ex-Goldman Sachs partners and others that were starting a specialty finance group. I ended up deciding to join. Well, if you fast forward a number of years after that, four of the top five of us at Fortress Investment Group were in that room. Dean Nicolias, Mark Furstein, who was our COO, Josh Pack, who sadly passed away last year, as well as John Shrewsbury, who stayed at that group once we sold it to Wells Fargo in 2000. He ended up becoming the CFO of Wells Fargo years later. Small group, but crazy talent and amazing experience. Going through that. Well, if you look through the career, fast forward a couple of things. I rejoined the band with Fortress over the years, and I was there a little over a decade. I ended up being co-head of credit with Josh on everything but liquid credit. There was myself and Josh Pack and Drew McKnight were named successors in '13 or '14. My only reason for deciding to leave was we were acquired by SoftBank. And I decided it was time to do something else. I was 42 at the time. I went through this self-evaluation on what I wanted to do next. I was a poor kid who had done well and didn't need to do it anymore. So you should do what you want to do for the right reasons. Along the way, probably about 20 years ago now, my wife and I, her dad was originally from Peru, had set everything up to go to charity. We'd set it up initially to global health, partly inspired by my mom and my grandma's, partly inspired by my dad, who was going to India in the '70s and doing trips there, and South Sudan until about three or four years ago. And Ukraine and Russia when the walls came down. I realized purchasing power parity, your dollars have huge impact. And the ability to save a life, even today, for $3,500 in global health is pretty amazing. The greatest ROI. So I did a trip. I joined the board of PATH Global Health, which is one of the largest INGOs tied to vaccination programs in the third world. This trip I did was to India. It was the first time I'd been in country in India. I'd been involved with PATH at that point for five or six years only as a donor. I'd just joined the board. We went all over India on a whole bunch of programs on malaria and tuberculosis as well as HIV and other things. You're sitting there in Dharavi in the slums in Mumbai. You get a lot of perspective on life, on what you want to do. I decided it's probably time to do something else. Whatever I do next, once I got back from that trip, I decided I was going to tie into charity. I even considered impact investing. A year ago, after I resigned, one of my first calls was to Aries and Mike Arrighetti, our CEO. And I said, "I'm yours if I want to run TAC Ops or Assets. I wanted to do my favorite part of the investing. But I wanted to have the ability to rotate across asset classes. I want to have the ability to do large deals in relative value. But I wanted to have a charitable tie-in." I run today Alternative Credit, which for those who aren't familiar at Aries, is everything. asset-based finance, which we've grown from five, $6 billion to around $50 billion in the last seven years. But what's amazing is what we've been able to do with that.
Speaker 2What was the charity tie-in
Speaker 1that you required when you were going to join? We played around with different options. There was even this idea of maybe we do an impact sleeve. A lot of people that know some about impact and a lot that knows some about investing and not a lot that know a lot about both. I also came around going, I've been doing this for a long time. This is my skillset. This is my 10,000 hours. I don't want to have an impact type direct tie-in, but what if I just do what I know how to do, but have it indirectly? Mike Arigati has been a friend for 20 years, so it was a lot of back and forth and, hey, what if we did this? What if we did this? And whiteboarding. I said, I'll do 5% of the promote if you get Aries to do 5% of the promote. For what we call our pathfinder flagship of family of funds, which is a little bit of a, you know, a little bit of a, you know, a little bit of a tip of the hat to path and a tip of the hat to Aries for any space geeks. I was driving along with my son and I said, oh yeah, we're actually thinking of naming it pathfinder. He was 11 at the time. Then he goes, oh, I get it. Like the Mars rover pathfinder. I'm like, well, no, but that makes sense. He goes, no, that makes sense. Cause it's Aries. It's Mars, which is Aries. And I was like, oh, you're smarter than me, but we named it pathfinder in that one. It's 10%. And now close to half of our capital is under the pathfinder family of funds. It's been amazing to be thinking of the growth we've had where we've already accrued over $50 million that will go to global health and education. I met Sal Khan along the way from Khan Academy who inspired me not just on global health, but education.
Speaker 2What was Aries initial impression other than, hey, Joel, we'd love you to come. Sure. I guess we'll do this for you.
Speaker 1Mike, when I asked that question said done first words out of his mouth and we'll figure it out later. He was very supportive and Mike Arrigetti and Kip DeVere and Mitch and Schmitty, I'd known them all during that time period. We'd done deals together. I'd lent to them. We'd done other things. So it was a known quantity on both sides. That part was not a problem. I met with some other people. Tony Ressler is our chairman today. I'll embarrass him a little bit. Tony initially didn't love it. He's very philanthropic. He looked at it as, well, we didn't want it to just look like marketing. We're a public asset expectation for all other funds going forward. What happens when other groups says, wait a minute, can we do that too? We went back and forth debating it. And in the end, the advantage of being a free agent, I was basically in the cards of, hey, that's my ask. If we want to do this, let's do this. As well as it was a percentage of zero. There was no fun. If I went in today, they'd probably look at me like, what are you talking about? What's more interesting is three years ago, I was having drinks with Tony. We were talking about the business and the growth of the business. And we've been the fastest organically growing group inside of Aerie. So obviously he's very happy with what we've been able to do across all those things. And I said, Tony, do you remember that conversation? He goes, yeah, I do. I said, you didn't really like it. He goes, yeah, I remember that. I said, so what do you think now? And Tony took a little bit, thought about it. And he goes, I was 100% wrong. It got me emotionally because it looked right at me and said, not only did it help change what we think about philanthropy at Aerie's, but now there's a whole bunch of funds that give one to 5% of their promote to help fund the Aerie's Charitable Foundation, which I co-chair with Mike Arigetti, separate and apart from what we did at Pathfinder. He said, not only did it change when it started effectively at the beginning of what became the foundation, but it changed the way I think of philanthropic giving. He looked at it as always being a personal thing. What he saw was the ability to have that much more impact when you tie it into your business and you make it seamless. We see that with our team, which is you're doing a deal. It's easy to talk about the $50 million accrued. And last year we did $4 million of grants and we're very early in the ramp up of this. It's amazing when you talk about those, but what's a more amazing was when you talk about one single deal and you're talking to a 25 year old or a 35 year old, and you're saying that particular deal, if it does what we modeled to, it's going to be 300,000 to two and a half million dollars that will go to charity. You did that. That's part of it. You're going to have your legacy for the rest of your life. That's the amazing thing about tying
Speaker 2it in. How did you come up with the idea of extending this beyond Aries?
Speaker 1About a year ago, we have about call it a third of our team that volunteers time for what we do for the different grants under the Pathfinder family of funds. A couple of people from that team came with this idea of we'd been talking for years of how do we get others to do it? I've talked to a number of GPs and said, you should do this. This is amazing for culture. It's amazing for your ability to drive the underlying philanthropies. They said, what if we kept it simple? What if we just made it like the giving pledge where you agree to give 5%, you get to direct where that goes. It's just a pledge that you're going to do that. And I said, that's actually brilliant. I use other words that I'm not allowed to cuss anymore. I said, that's brilliant just because of the simplicity of it. So what we did we worked with our internal teams on PR as IR. We worked with an external term on building a brand piece. But what we came up with is what we call promote giving. The idea is that simple. You're agreeing to give at least 5% of your promote of a fund or fund series. It doesn't even have to be the entire firm to philanthropy, whether it's housing, whether it's health, whether it's education, whether it's homelessness, whether it's climate, whatever the passion is from that really did come from that idea and saying, what if we got others to do the same thing that we've been doing for the last seven years?
Speaker 2Since you started doing that, I'd love to hear a story from one of the charities that you chose of the impact you can have with the dollars that you're
Speaker 1giving. We're helping co-develop a surgical center with Mount Sinai in Zimbabwe, where we agreed to pay for half if they agreed to get matched funding for the other half. They've all done with teams and staffs that are on the ground with some telemedicine for higher risk type cases. But if you thought of what that surgical center would cost in the US, you're probably talking 50 to a hundred million dollars. You're able to truly save lives and do something that has that kind of impact just from one single grant. We also did a project with Educate Girls, where they're effectively through a mentor program going door to door in rural parts of India. We toured with them in Uttar Pradesh, where they're talking both about how to get girls back into school and the value of the education. At the same time, helping them with the paperwork to get them back into school. Their success rate is amazing. Our small grant will end up impacting probably about 150,000 on the expansion that they can do on the villages that they're going into and counting that across all parts of India. That's just two grants we did last year. We did a little over $4 million in seven grants, and we're just getting started. What's the uptake been in the initial six months? We had eight founding signatories, so it included groups like Silverpoint, and Robert O'Shea has been an amazing supporter of this. Jeremy Collar and Collar, same thing. Some groups that are newer because they've just launched funds, but people have been in the industry for a long time. Chad Pike, Ed McElroy, Adam Pierkowski, Derby Lane. We also have some smaller groups that are more impact or others related, venture like Ascend. We have Pantheon on the secondary side, and then Pretium, which makes all the sense in the world. Ted over there became that person who said, I want to do, and the internal rabbi. The coolest part is the last of the eight founding signatories was related management, so Jeff Blau and others. We've now done deals with most of the groups because in this whole process of putting this together, you're all talking to each other at the top of the house level. Part of the conversation is we should be partnering with you on this. We've already done a couple billion dollars of deals with those that are in it because you've created this unique community that are all like-minded. As you know, half the getting deals done is who do I want to trust and who I want to partner, and you've been able to do that. The uptake has been amazing, and we've had some snowball since
Speaker 2then. How's that snowball worked? How'd you go from the initial eight to whoever else is involved
Speaker 1today? We've had two Cs, which is a hedge fund who signed on since that. We have four or five others that are in different forms of documentation or others that have verbally said and gone through. As you can imagine, two Cs, it was a credit. It was a quick process because he loved it, and he said, I'm absolutely in. And very quickly, we moved it forward. When you get to very large organizations, it's about 17 meetings and formal approvals and boards and others to go through it, just to make sure you're thinking through all those pieces and how that will work out. The interest has been amazing. We've had inbounds from Asia that are reaching out and saying, hey, I run this hedge fund. I love what you guys are doing. Can you tell me more? The goal long-term is you want private equity, you want private credit, you want venture, you want real estate, you want hedge funds. You want private equity, you want real estate, you want hedge funds, you want fund to funds, you want secondaries. And we're getting pretty close to that. We pretty much have almost every type of alts because it really is this mechanism for more, we call it compounding purpose. You're compounding purpose, but you're also building permanent type funding models for philanthropy, as opposed to them starting from scratch every year.
Speaker 2When you get an inbound or you're reaching out to someone to tell them about it, what's your elevator pitch for promote giving?
Speaker 1First, I tell the origin story. I do believe karma is real. I do believe a lot of our successors success and our progress has been because you put good things into the universe and good things happen. It helps who you are as an organization. When you've said, this is our true North. This is what we stand for. This is what we're doing. This is what we're driving going forward. I've even had transactions. We did something with Mike Lowell Milken on their family office. Mike absolutely loved that we had this alignment and we had this transaction on a deal where it's a tie with three or four people. It's like, I think I'd rather partner with this person. And he's been an amazing supporter ever since across that. It is walking through the simplicity of it where people can get hung up as they can say, well, wait a minute, is it the whole firm? And what's the timing? There was even some misperception up front of, oh, it all goes into promote giving. And then we give the money away to the different charities. No, everybody directs their own in our quarterly calls and others. What we're doing is we're saying, okay, you're focused on housing. You're focused on help. You guys should be talking to each other though, because there's great stuff you guys can be doing together. Like investing. There's people who have never really done it. There's people that have DAFs and have done some individual donor advice funds, things. And there's people that have full-blown foundations that have huge infrastructures. It's trying to figure out where people are in their cycle in telling them the backstory.
Speaker 2What are you hoping to achieve with promote giving?
Speaker 1I jokingly said to Eric Getty at dinner a couple of years ago, when we started talking about this idea, and I said, I've decided I want to be a business owner. And he said, I want to be a billionaire. I'd let that sit for a little bit. Cause you know, when your boss, you're telling them you want to be a billionaire. I just wanted to scare him a little bit with that comment. And he's like, Hey, let's talk. I said, but I've decided my definition of billionaire is being able to give billions to philanthropy, whether through personal, whether through Pathfinder, a family of funds, whether through promote gimme. I'm say here today, pretty confident that's going to happen. Cause it's just logical. It fully aligns the culture of teams. It fully aligns the culture of people. It fully aligns the culture of business. And I think that's going to be something that we're going to have to figure out. for health and education and their programs. And you're driving the highest dollars to philanthropy when you do that out of your pocket, not out of their pocket. So you're not giving anything up. You're not sitting there saying I'm taking less returns in order to drive that. The simplicity of it is something that will grow. And I do think that this can build permanent funding models for philanthropy. If you look at some of our initial grants we've done, it's amazing what you can do through this. I also think that your turnover, your culture, your purpose, and the reason you're doing this are all dramatically better. That's the goal. I decided a long time ago, I'm never retiring. And as long as I can tie the investing with the philanthropy, I have a reason I'm doing it. I've been very excited to see what this will do. One thing I'd say in closing, and I'll quote Jeremy Collar, I used to say, there's only three things that really matter when you're in your 80s, your close friends and close family, your experience, and did you give back? Mentoring, teaching, parenting, or philanthropy. Jeremy has a better version of that, which is, is your 13-year-old self proud of what you've done? Is your 85 or 90-year-old self proud looking back at what the life you've done? Those are the things that really matter. I never dreamed this big when I was 13, I was just trying to go back to work at Micron. Part of it excites me about all this is seeing where this can go. In the end, you want to be able to look back and say, hey, we did everything we could to improve this. And the dollars and the impact to come out of this are absolutely amazing at what you can do.
Speaker 2Well, Joel, I'm super excited to help you spread the word about this because it is an incontrovertible good for everyone involved. Thanks for the initiative and thanks for telling us about it. Thank you, Ted. Thanks for listening to the show. If you like what you heard, hop on our website at capitalallocators.com where you can access past shows, join our mailing list, and sign up for premium content. Have a good one and see you next time. All opinions
Speaker 3expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast.
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