Francesca Sanderson managed an ethical equities fund at JPMorgan as an asset manager but quit that to live for a year living off grid.  She then became a social impact investor with Big Society Capital and now runs the Arts Impact programmes at Nesta. 

We chat about what she learned, missed and loved about living off-grid. How she has a more pluralist world view.

Fran talks about what she learned at JP Morgan. The power and the weaknesses of institutional and organisational strength.

“When I was at JP Morgan, I  would be watching people move from their CFA and then go now I'm going to do an MBA and I'll be “why do you want to do an MBA? That's not interesting.”  Now, with the benefit of 20 years hindsight, I don't think there's anything more interesting or crucial than how organizations work and how stuff gets done…” 

We discuss social impact, its opportunities and risks and highlight some brilliant projects.

We chat on the the tyranny of numbers and data and the tension between process and oversight, and over burdensome bureaucracy and slowness.

We play overrated/underrated addressing stakeholder capitalism, the settlement movement, and cycling.

Fran ends on her advice, be trustworthy:

“I think that this is a reflection on life and society and where we are today. Trust is underrated. I think I just behave in a trustworthy fashion. It's a long termist thing. It's not freewheeling, can we get away with its culture at all, but ultimately for the benefit of the planet of society, just be honorable when it's not an easy thing to do.”

Available wherever you get podcasts, or below. Video with captions on YouTube, or above.

PODCAST INFO

• Apple Podcasts: https://apple.co/3gJTSuo

• Spotify: https://sptfy.com/benyeoh

• Anchor: https://anchor.fm/benjamin-yeoh

Transcript (only lightly edited)

Ben Yeoh (01:19): Thank you. So I'm going to start with the pivot year, cause I think a lot of people will be interested in that. What did you learn living off grid for a year? What was the experience like? Would you advise it as a thing? How was it for you a year off the grid?

Francesca (01:37): It was an amazing experience. I would not take it back for the world. We had two little kids as well, so that makes it extra complicated because no washing machine, no running water, you really come up close to that challenge when you are living with two small children. I think the thing I take away in terms of imagery, how I remember it, I just remember pace. So we would come back to the UK, I think we came back for a wedding for Christmas and I would come to the UK, not even to London, to Portsmouth where my parents were and I would just be struck by this pace of life and everyone's running around so busy. And then when we got back to Portugal, it was like, ah, okay, I can relax. So, that was a real-- the sensation I think was pace. It was a slowing down of pace. It was almost like slowing down your heartbeat, really being able to be in the moment and I think that that felt like a skill once acquired, I've worked to keep to try and get down to that sort of basic pace and understand what of the busyness is noise and what's unnecessary.

Francesca (02:51): I think it's great to have done it because then when you've got dreams and they're just dreams, then they are fantasies, an element of that is just fantastic. So if I were to go, oh God, my life's really stressful, I want to just run away to the Hills in Portugal, I know how challenging that is and what the challenges are when it's rained so much that you can't actually drive your car up to the house and you've got to carry all the shopping bags in the rain and you've got to drive 15 minutes to have a shower, which we did do probably like once every fortnight, because it was really nice. I don't like washing a bowl. Anyway, I think it was also really nice to be able to focus on each other. I think that I built really strong relationships with the kids because we were just used to a very low distraction environment, I think and I feel like that's sustained as well. I mean, it sounds like a cliche back to basics, but it's a real thing. You realize what you need and we'd put all our stuff in storage in London, and it was kind of painful thinking about that money coming out of the bank account and we're like we're not missing any of it, we're not missing any of that stuff that we're paying to store in London and I think that time I was able to live a very minimal life forever, that creeps up, doesn't it and I wouldn't say I'm living.

Francesca (04:20): I mean, I think it's still there, but you have to hold on quite tight to it, but there's still kind of a core. I do have a reverse urge. I think about living off grid again, I think about living in tiny houses, I think about minimal lives and there was lots of it that was really appealing. At the same time, I really, really missed everybody. I really missed the diversity of people that I was able to-- that's the bit that ultimately why we came back. I miss my friends, I miss my family. I think that there's a real group that thinks about that kind of life. We are living quite an alternative group of people and there was a lot of self-reinforcement going on in the circle about this is the way to live and everyone who doesn't live like this, they're the losers and I can't stand that kind of-- Well, I find that lack of critical thinking in a group really challenging. So I think that was one of the things that I felt like you really lose diversity of opinion in those small and gendered environments, I guess. But it was very beautiful, it's really nice. None of us needs all the stuff that we have but that's the conundrum, isn't it? Consumption keeps the world economy's turning, but it is possible to live with much less and there's a lot that's appealing about it.

Ben Yeoh (05:49): One comment you made which really struck me is that idea of making some time to have essentially a kind of indelible bond with your family, which will sustain you through good times and bad times, which is something I hadn't thought of. I guess, in a way that's why people do these.

Francesca (06:06): I mean, it probably should point out that I'm no longer with my husband, so.

Ben Yeoh (06:11): Worked with the children, doesn't necessarily work with your romantic relationship say. Okay, so we will caveat it there. And so, you pointed out diversity of thought, pluralistic thinking, and also the struggle with missing community and friends. You've obviously have a community there, but there's a community that one grows up in which is that-- Anything else you think was maybe misunderstood or underappreciated by you or that you think people who might be thinking about off grid maybe there was something, what would they most underappreciated? Cause I guess people probably get that this is going to be a simpler way of living and maybe, I guess people sometimes worry about being bored or what do you do with your leisure time or is it much more basic looking after land and looking after the things for that. But I wonder if there's anything else which you kind of think, well, this is the thing, actually, you will be surprised that you miss because actually everything else you would likely know.

Francesca (07:14): I think maybe it's more the things you'd be surprised you enjoy. I did not enjoy gardening. That stage of my life I was in my early thirties. I find it probably still actually, but I mean, I love looking at beautiful plants, but the actual act of gardening, I'm not particularly interested in. So, that doesn't just come with being bucolic which I was hoping it would. I did enjoy being in the environment. The community bit is interesting. There's some really practical things and obviously PV technology has moved on since we were there in 2009, 2010 but there were these people who helped us, we got secondhand panels, we knew who to buy from, we knew who could help us set up the inverter and the regulator. It's all ad hoc systems that we were buying but there's so much opportunity for sort of shared intelligence, making that kind of stuff. The community was really helpful there. Living in a community in that way, community's a really interesting thing that I think about a lot because I haven't really-- community's something that's been not particularly present in my life, I would say. I went to school on a train. I love my kids there at the local school. We just know everyone. You just know people when you're walking around and you've lived in the same place for 10 years, I didn't really have that. So in a way, Portugal was the first community that I'd really felt I belonged to and there was the kind of barter economy and you help with this and I'll help you with that.

Francesca (08:56): At the same time, I didn't really feel like I belonged to it in some ways, because I was less bought in than everyone else and then that can make you feel like an outsider quite quickly. So that was interesting. You've got a lot riding on your inclusion, that can feel quite insecure sometimes, I think. They're all perilous but again, I don't know if I want to go into that too much. A reflection of where my relationship was at at the time, but it sounds really nice until you are on the wrong side of it.

Ben Yeoh (09:37): Yeah. So, there's upsides and downsides to any community.

Francesca (09:40): I guess it's a risk thing.

Francesca (09:43): From an investment point of view, I'm much more of a dispersed risk person and if you're in a small community that's tight knit, you've got all your eggs in one basket basically.

Ben Yeoh (09:53): Actually, maybe we should jump back then to JP Morgan and well, I guess it's ethical equity. So in that sense, it's off mainstream, but it's mainstream in the sense that it was mainstream investing. What did you learn from that and maybe as a way into the learnings from that as you then went into impact or social impact into arts impact?

Francesca (10:15): Yeah, I took for granted everything that I learned at JP Morgan really. I mean, I'd done a completely abstract degree. I stopped studying any humanities when I was 13. I basically knew absolutely nothing about the world and how it worked and wasn't really interested if that doesn't sound too terrible. I've gone to university and made friends but I didn't really think about anything. I just wanted to write books which I still haven't published one by the way and you would think if you wanted to write books, you would really care about how the world works because you'd want to write realistic books. But I got to JP Morgan and it feels like it's very interesting and I was very aware early on that I was learning economics, but it was the first time I suppose I became aware of the agenda of an education. So I was obviously learning at the Chicago school of economics. I was doing my investment qualifications and I was aware at the same time that I didn't know that that was beginning to feel like-- I don't know if I'm an catalyst even though I'm working at JP Morgan cause some of these things I'm learning feel counterintuitive to me or that doesn't feel like something that should be left up to the market. But what I didn't appreciate, I feel like I should go back and say thank you to the bosses I had in a way, because I didn't appreciate how much security you get, how much you're taught, how much you're learning all the time about how institutions work properly well work smoothly I guess and even though I saw through two mergers--

Francesca (11:53): So, my graduate job I got with Flemings and then just before I started Chase Manhattan took them over. And then about three months in, I think JP Morgan and Chase merged. So there was really quite a lot that was disorderly going on at the corporate level, but still the processes worked. It was a smooth machine because your clients are everything in the asset management business. Your processes kind of go towards that and I didn't appreciate how functional that was until I then started later in my career at a place which had no process whatsoever. We were all just freewheeling around and making things up as we went along which is wildly exciting, but it did make me think, oh wow, yeah, processes, they're important. I think the thing-- and I don't Know like I say. I never really wanted to-- my identity wasn't someone who works in the city. I didn't feel like I fitted in, I was very resistant to that. So I was probably childish about, or ungrateful for all the things I was learning and it was obviously a well-paid career and I got opportunities to travel. I lived in New York. My qualification was paid for. All of those kinds of things. Where was I going with the identity bit?

Ben Yeoh (13:16): You were pushing back about being a city girl. You wanted to think of yourself not as a capitalist, even if you were in a capitalist system.

Francesca (13:24): Yeah. You were asking about what I learned.

Ben Yeoh (13:36): The systems and institutions bit is quite interesting because as we both have delved into say charities or startups or smaller organizations, there is this tension between-- So, startups famously sometimes they kind of go fast break things mentality as opposed to, let's say move very fast and try not to break things, which I kind of think is perhaps more sensible and then large organizations. Whether they are governments or corporations, size and process comes with these bureaucracies which people push back against as well. But in some ways, sometimes processes are like wearing a seatbelt. If you are a super brilliant driver, arguably Lewis Hamilton doesn't need to wear a seatbelt because he's never going to crash, but there are things which are not in your control. So actually wearing a seatbelt are kind of the processes which help with that, and it's a difference between sometimes in our world, we talk about governance, these processes, I think, are sometimes like the seatbelt and stewardship or thinking about the future sometimes, just like you're driving. So, your operations and things are like, well, I think I'm the best driver in the world so let's just go and do this and you feel constrained by this is where the analogy slightly breaks down cause you feel constrained by the seat belt, by the other rules and things. But there is this tension and like you say, sometimes they're helpful and sometimes they're not.

Ben Yeoh (15:02): So I'd be interesting in your reflections on moving into say social impact where you're still trying to get returns and do stuff, but you're trying to get, say an extra financial return, whether that's social, artistic, creative, as well as sometimes the financial hurdle that might not be within that case and then that tension between trying to do things properly but also some of these are much more experimental, some of them the processes aren't there. I've always thought if you are maybe a two person organization, even a 12 person organization, the levels of bureaucracy that you would have to account for in terms of say something like measuring impact or doing something is never going to be the scale of JP Morgan, which might have a team of 12, just looking at that. And I don't know where the lines are because of course, if you don't measure impact at all ever then how do you really know you're doing any? And sometimes you do, sometimes you don't. I'd be interested in your thoughts about that now having-- you've worked at a big corporate and you've worked at small and you've done from financial return to impact to, I guess, philanthropic giving as well.

Francesca (16:10): Yeah. We can go back to the previous question now because when I was at JP Morgan, part of my sort of identify into this role that I'm taking on would be watching people move from their CFA and then go now I'm going to do an MBA and I'll be like, why do you want to do an MBA? That's not interesting. Now, with the benefit of 20 years hindsight, I don't think there's anything more interesting or crucial than how organizations work and how stuff gets done and I was listening to the-- we had a presentation this morning at the social investment forum from the national lottery communities fund about their new strategy and giving money away well is really bloody difficult as you know. It's a really, really hard thing to do and I feel always this tension between-- I mean, this is a whole of life fully make a rule and stick to it and be methodical, but you've got to be agile and you've got to work out when what you're doing is wrong and one thing I've been thinking about a lot lately is at Nesta we have-- So, I guess grant givers usually look at your overhead ratio.

Francesca (17:19): So you think, well, how much of this overall cost of a program is going to the people who are distributing the money, who are processing the applications, who are helping the successful applicants with administering their grant and delivering their project. So, what percentage of the overall money is going on that overhead rather than out to the front line, as you might say. Nesta has always had quite a high proportion, partly it's luxury, since it's been out it's an independent foundation it's supposed to be focused on innovation so you can make a case for spending more on those things like getting the cohort together, shared learning, that kind of thing. Also, it didn't have any hard limits. So I think that the non-departmental public bodies, arts council, national communities front, they do have hard overhead ratios, but I think that can be a real false economy if you're just focusing on that number in a black and white way. I'd love to see us all collaborating as grant funders going well, in what circumstances does it actually help to have much more support alongside the money and is it worth what stage, what types of business, what type of grant, what kind of organization you're working with needs more hand holding? I think a lot of the diversity focus funds that are out there now, there are way more structural hurdles like practical, emotional for minority leaders, getting money, delivering projects.

Francesca (18:59): I think there's a really strong case for those to be high overhead products, but at the same time you could argue that means much less of the money is going out to those minority businesses or social enterprises themselves. So it's a tricky one. Another thing that I thought, so my earlier career prior to graduating, so I worked through all of my summers at university. I was working at charity and I found that even as a, as I've said, 18 year old who knew absolutely nothing about the world, I found there were really frustrating inefficiencies to me. So that doesn't feel like a sensible way to do that or it feels like this hand to mouth existence creates real, waste is the wrong word, this all feels like really loaded language. I'm not going to name the charity but I always thought there's-- I was focused on kind of, I think, we can deliver better. I think I just have quite a lean mindset and that's probably because I grew up with a very, very tight-fisted, lovely father. But I've always kind of had that sort of frugal let's do things the most efficient way possible and then obviously I was at JP Morgan was all focused on maximizing earnings per share or when I was on the credit desk, free cash flow and keeping costs low and that sort of formulating in my mind is what do I want to do with my life? I want to write novels, but I'm also really interested in making charities more efficient in a way that works so it's not an extractive process. Say a kind of pay for success model of cost cutting.

Francesca (20:49): So, it only works if you and actually now I think about that, there's lots of problems with it, but coming back to then starting in the social sector and I think that was very much almost a foreshadowing of where big society capital landed. I think we certainly did and I guess the majority of us were ex bankers when it started and there were only seven of us when we started in 2012. I was very conscious that we didn't have a kind of it's okay guys, the banks have landed to save the world of the social sector, which I'm not sure we successfully managed to avoid and it just made me realize that things are a hell of a lot more complicated. I hadn't really appreciated team cultures and sustainability of staff and things that we all think about quite naturally, thankfully these days, because the narrative has changed, but they're really downsized to a sort of one dimensional efficiency mindset, I think. And I think more people are talking about that now and yeah, you have to be careful when answering questions that the answer to everything isn't complicated. It is complicated, but I think that yeah, and there's also fascinating stuff about organizational size, which is another thing that you alluded to or mentioned directly.

Francesca (22:25): I think again, without wishing to name individual organizations, I thought recently that maybe 200 to a thousand is the worst possible size of an organization because it's not big enough that your processes make sense, but it's big enough that you have to have them. So a lot of dysfunction can happen in that size. I mean, maybe not if you are on a growth trajectory, so you can see your way to your 5,000 or your 10,000 staff.

Ben Yeoh (22:55): Yeah, that happens. I think it happens around 120, 150 because below 120, essentially everyone knows the founder CEO type and everyone knows the top, call it three to 12 people in the company. And then once you're at about 200, not, and even actually about 120 often that founder type person has interviewed everyone coming into the company and then at about that stage, it's just not possible to do that. And another thing you mentioned, I really resonated was I'm going to call it the tyranny of the number or the tyranny of the data where and you see there's sometimes adjacent to what you are talking about with a gender number or a pay ratio number and you are just very wedded to this one number cause it's hard data point and you can kind see whether it has been right. But we know that sometimes there's a lot of other things which go around that; the number or the average doesn't really reflect the whole story and if you just go by where that hard number or the hard cutoff is, you will miss a lot of the nuance behind the story and actually in a lot of cases and I'm seeing it increasingly now that that nuance of the story is really important.

Ben Yeoh (24:07): The problem is is that some people who would be minded to be on the opposite side of the argument are just using the tyranny of the data to kind of push their own way without saying actually if our ultimate aim is X, then yes, this number needs to improve and it's not where we want it to be, but actually everything else is, and so we should let it happen. Rather if you're not minded or you forget about X or the people are not very interested in X, they'll just use the number saying, well, this isn't good enough, let's not fund it or this isn't good enough even within that. And I think that's really interesting happening in some of the debates and you actually see this when you go into, say, some aspects of environmentalism or social justice that actually people who are not necessarily you would've thought minded to where the long term cause is going, uses those own numbers back to whichever community grouper says, well, look, you haven't met it on X or we're going to focus on this very niche bit of environmentalism say, but doesn't take in the whole picture, but they're not really interested in the whole picture cause they just want to stop it.

Francesca (25:19): Yeah. I love that, the tune of the number. I think that there's obviously good hearts law, but the thing about metrics is-- Well, one thing to talk about directly is that when we started the arts impact fund, so that's a fund that was a pilot set up with Arts Council England Nesta, Esmee Fairbairn Foundation, and Bank of America which is interesting in a few ways, as I would say, because it's my project, but I didn't design it because it's public, private, philanthropic money blended together and it was the first time that someone put together a fund specifically to make repairable finance available to the arts sector. And we were thinking about how would we measure our artistic metrics and our artistic impact and our social impact and we were very aware of kind of capacity constrained organizations that we were investing in but I started in the job talking to the investors as a group, trying to design a set of guidelines and of course they want metrics cause they want to know whether we are doing well in terms of the fund management and they want to know that they want to achieve the same thing. But if we'd taken from that, this is what we want to achieve and then we push that down on our organizations, we are changing their behavior and asking them to report on this change behavior, capacity wise it doesn't work.

Francesca (26:37): So I said, well, how about we just, you know, the metric that we report to the investors is how well they're doing, it's a relative measure. So it's a relative measure or second order measures, how well they're doing against the target we've agreed with them and what the rate of change of that is over time. So you've got something to look at that you know whether your farm manager's doing well or you know whether the market is ready for what you want to create, but we are not imposing hard first order metrics down on the organizations that we're funding and I think that probably works for time. I think investors are going to be fine with that for a while, but ultimately, probably that does need to morph into something else that's sort of reportable outcomes rather than rate of change in achieving outcomes. But at the same time, it's not as clear in a sector like the arts and the creative economy. It's not like malaria prevention or inoculation or eye surgery. There aren't obvious hard metrics that will show you whether you are doing well or not.

Francesca (27:42): UI was going to say something else about the tune of the number and I think just numbers-- A metrics can't be for anyone an excuse not to think. Yes, it's there as an indication, but it's never going to capture everything and I think it's what's exciting and difficult about impact investment really because essentially you're trying to build a market, you're trying to raise money. Of course, the people with the money have the power and the people with the money are used to being reported to on a very simple basis. It's a linear metric. It's return. What's your total financial return?

Ben Yeoh (28:19): Is it going up and to the right.

Francesca (28:20): I mean, it's obviously it's got time as well, so IRR. It's yeah, exactly, is it going up and to the right? And we are not only trying to say you need to look at more things than that, but also those metrics are going to be more challenging. It's not just going to be one number. So, an impact number isn't really going to make sense. Even if I told you your impact was 3.7, you'd probably want to know what was behind that or maybe ultimately you will get to that stage and then loads of people, brilliant people are working on that being the case. I guess my hope, which may be a bit optimistic, maybe it's the anti-capitalism that's going back out, is that the impact agenda is changing that power balance a little bit in that impact deliverers now have something that holders capital want, which is impact. That's expensive and it's difficult and capital holders can't expect to get it for free effectively. So I slightly differ from Bonnie Cohen in the narrative where I do think that it's costly. I'm sure there will be impact investments that can certainly beat financial investments. I know that's been the case in a lot of sub asset classes to date but I also think that we can manage expectations that investors aren't expecting to get that impact for free. So investors expect to get financial awards and environmental wards and social awards and their total return is the aggregate of that.

Ben Yeoh (29:52): Sure. I think that's really true that there will be certain kinds of projects where I guess, the determinant is concession capital. You cannot expect to have the same as a market return. Although we always talk about it, so-called risk adjusted and you actually don't know the risk before you embark on it. So I always feel this a little bit but neither do you in mainstream investments either. So this is partly the fraud of the number. Not only is it tyranny but there's a false precision in it, 3.2 versus 3.4% on an IRR. Everyone knows that well.

Francesca (30:26): Well, the B2 used to be 1.5.

Ben Yeoh (30:28): Exactly. And we made it up sort of the first time we tried to use this thing and this model and I think probably impact investments may have come up with the same or better return, but they probably took more risk, but who knows because you're also taking a risk that you can't measure very well. Yeah. But actually there is something--

Francesca (30:46): No one's corrected for, you know, a lot of it's property so far and yeah.

Ben Yeoh (30:50): And how can we, we might not be. And maybe that's fair enough. If you want a health return, a social return, an environmental return, you're not going to necessarily all see it in cash flow or necessarily all see it in GDP. So a lot of economists are thinking about how we do GDP plus, natural capital, human capital and the like. I guess that leads me on the arts impact bit or creative impact, what are the projects or ideas you've come across which have most excited you and maybe any successes or ongoing interesting projects and maybe any failures you've learned from? You can do either the success or failure or both sides.

Francesca (31:29): Well, so many exciting projects. It's really interesting--

Ben Yeoh (31:34): Hard to choose between your children.

Francesca (31:36): Yeah, it is and I think another sort of fascinating thing is that I find, and this again, it might just be a personality match thing. I just find I meet the most-- it's such a privilege to meet the people I get to meet in the course of my work, whether they're Nesta colleagues, whether they're people working in the arts, whether they're board members who like giving up a lot of their time for small organizations. So, yes, it's just a totally humbling, really brilliant experience. It's hard to pick out any. Yesterday I went to a symposium at the RCA, which was about the intersection between design innovation and the criminal justice system and that was really brilliant. That was led by an adjunct professor who runs one of the organizations we funded through the cultural impact development fund - Judah Armani - He runs something called in-house records. So he works with the prison population on making music and I think his basic thesis, and you'd have to talk to [Judah] or go to the website to check this. But it's essentially where there are sort of trauma histories or communication challenges, you can process a lot of that better through a creative act than you can through just talking therapy because talking therapy might be quite confrontational, the participant might not necessarily be equipped to do that and also the other side of it is there's an amazing amount of creative talent that is there, that's untapped, it's not been facilitated.

Francesca (33:15): So he is working with the prison population. They've set up a record label. They have recordings and he also employs the people that they've been working with as they come through the gates and come out of prison. So, it's nice, and he's a real systems thinker. He's an innovation guru and that for me is really-- I mean, it's exciting on a personal level because I'm meeting people I wouldn't have met previously. We've had guys from house records come and perform at art events and it feels like an example of someone coming up with an idea that probably felt quite impossible and managing to make it work and now it's a scalable intervention. The Ministry of Justice pays for it. Recidivism rates are much lower than the depressingly high average. They're really, really impressive. So that kind of thing to get to say they're being able to scale in a way that they wouldn't if we hadn't been there is really amazing. It's just almost from an ego perspective the--

Ben Yeoh (34:30): And huge amounts of impact.

Francesca (34:31): Yeah, huge amounts of impact. Another organization that we funded is Earth and Hackney. So, Village Underground wanted to-- they could see the kind of gap in the market for a live music venue in Hackney and they'd been working with community music, which is an arts council, NPO who worked with young people and through-- I think it worked really well. [ ] of course I'm going to say this, but we help them get the money together. So we brought in Unity Trust Bank and Big Issue Invest and then we also worked with them on how they could formalize their arrangement with youth music so that youth music's young people could come and use the equipment when it wasn't being used for gigs. And now I want to think of a female lead initiative. It's an amazing one called [Effervescent]. I think they're down in Cornwall. Ellie Malone they are very much focused on lived experience, so they would be using kids with lived experience at the fostering system, for example, to make content that is for foster parents, basically. Again, they've done some campaigns on mental health and I'm probably really behind on what they've done because Ellie's just like a firecracker of energy and is always doing amazing stuff, so.

Ben Yeoh (36:00): That all sounds amazing and I think this area, I think it's still underrated and underweight partly because it's hard to measure and therefore for what we were talking about earlier, a lot of people are a little bit more cautious, harder to track. But because of that, I think even though the amounts of capital we're talking about in the huge system are relatively small, I do think there should be more interest and money going into it and it's really interesting. So traditional venture capital often talks about the importance of people and you're backing people and you sort of mentioned that and big public equity investing, yes, people are important, but often you're packing a business or a business model and quite frankly, senior management does change. In fact, they often stay there no more than three to five years nowadays which is very different. So I'm interested to know when you are looking at this, how much weight are you putting on the person? Does the business model-- I guess most of them in traditional ventures often have this famous, we call it pivot, right? They have to change because they're not quite working in the first way and I'm assuming there's a lot on the people and in some ways you can't actually take out the business model from the person and a lot of startups. In some ways it's a slightly false question. But I am interested because in that sense, you're doing almost exactly what a venture capital person would be doing, but with a slightly different metric at the end, is that how you see yourself?

Francesca (37:28): I think so. And I think when we talk about ourselves as a relationship based lender that kind of goes right through, and again I don't know whether that's because of the phase of business we're at, because the phase of the market we're at but trust is really hugely important in a commercial level in terms of making our numbers work, but also in terms of building market that functions and being seen as something that is working for the market. And we can get into kind of early markets, things about cooperation and competition and collaboration and lots of things that I'm really fascinated by as the social investment market generally grows. I mean, I do want to talk about the social investment market and some of the really existential risks facing it at the moment. I think there is a lot about people, but at the same time, we've also funded large NPOs and it's less about the person. Again at that stage, I guess it is about implement-- It's how we're judging our execution risk basically but with the person it's a hell of a lot to carry on your shoulders, especially, you know, it is anyway, if you're a venture capitalist and this is the person who's got huge upside potentially, if this is a person who's working a small cash strap arts organization is never looking at a unicorn or even a six figure payday.

Francesca (39:04): It is a lot to hold on one person's shoulder, so I think we have to be aware of that. And a lot of the work we'll do is about making sure that people have got good boards and that's not so much for you know, because they're custodian of our funds, it's because we're all aligned. Everyone wants it to succeed. We want the founder to succeed. We want the leaders to succeed and the best way they can do that is if they're supported. So, I think that, yeah, we do care a lot about people. We do care a lot about the culture of the organizations that we're funding and again, that's from a sustainability point of view and from a kind of ethics and [Diversity]  point of view as well. And I think this is really talking about sizes of organizations and functions. I think this is something we all have to watch out for in the whole system is the impacts of inequality are just playing out. And I think that even if you talk about your 120 size of organization, I think that gets smaller now because there's so much disparity between the top and the bottom. We were just talking in the social investment forum about how we manage in our own businesses the cost of living crisis and how imperative it is to be looking at the people at the bottom who are really experiencing this cost of living. The headline inflation number really means nothing because those of us with more income spend a far smaller proportion of our money on electricity and food. So that kind of thing we're really-- We already felt pretty polarized, but these are really strong polarizing forces that we're experiencing at the moment.

Ben Yeoh (40:46): Do you think that's the biggest existential risk for social investment or the social investment movement or community, or you alluded to other things you are fearful for as well?

Francesca (40:59): Yeah. So that was at the kind of the intermediary level, I think at the social sector organization level, it's really tough. I mean, community assets all have high energy costs, pretty much. There's community pubs, community leisure centers. They're already at the stage even before winter where people are thinking, can I actually afford to keep this open? That's a huge existential crisis and community is a big part of the social investment movement. And then I think also, we've built this market in the last 10 years and essentially a zero interest rate environment. If there are better returns for cash, it's even more challenging to get people to accept concessionally return and high interest rate environment. So, stagnation is one of the worst things that could probably happen at this point in the market development. I don't think that's necessarily a problem. I think there are policy levers we could do to mitigate that. I think you just need to point out to governments. It's really about the horizon. So if you can convince policy makers that, look, we've set up something here, there's a bit of an infrastructure that is hugely valuable to you over the longer term, it's a way to make private public impact oriented capital work together. A lot of this is being and has been built and functions. If this dies over the next three years, you've got longer term problems. Whether the policy makers in this country are thinking in that timeframe, I don't know, but globally somebody must be world bank.

Ben Yeoh (42:34): It's not necessarily at the top of the banking and the treasury people's concerns, but I do think when you articulate it to them, they would understand. So this is the kind of worry about, I'm not sure it goes in because as you point out, the language of say the treasury or treasury functions is often quite different and I think this is why you're kind of uniquely placed. But for instance, you understand interest rates and inflation but on that kind of technical abstract level, which actually, I think a lot of people within social innovation don't quite, and you make the point high inflation, which is cost of living or high interest rates, both of which, and they're slightly interlink could destroy whole segments of the sector and therefore there's a policy lever, you could do something about that. That clarity and line of thought that you have actually isn't articulated by so many people and they are in their different spots, but not through this and I wonder whether it meets policymakers. So anyway, there's something to be done on that.

Francesca (43:34): Well, yeah and the other thing I think is that so much of what we see, it just feels really obvious to me that we have-- There's early intervention opportunities all over the place and the problem we have in the world is not a shortage of capital. There's a hell of a lot of capital seeking opportunity and I'm not talking about private equity people rinsing the care system. That's not what I'm talking about. There are opportunities where we can-- Green Infrastructure's a very obvious one. I personally think it's absolutely crazy. You would be incentivizing fossil fuel extraction in the most recent budget announcement, rather than that was an opportunity to actually get capital working on renewables. So that feels like a big miss to me, but just as a working capital problem there are opportunities here, huge gaping holes, which deliver massive savings to the public purse. I mean, they're huge inefficiencies. Children of care is a really obvious one. It's terribly expensive. It's just an early intervention investment problem and that's about structuring capital to me and that feels like the government should really be listening to that.

Ben Yeoh (44:50): And that's where governments may be uniquely placed. I feel a tiny bit of sympathy on the energy question because there's geopolitics involved as well, but they could go heavy and I think they may have gone heavy on both. So both renewables and say opening up north sea again because of that. Obviously, I'm minded to why didn't you just go completely hundred percent heavy on renewables? Obviously my preferred thing, but I can see why they do it and if you go on both and someone else has told me, wow, you actually need to propose 10 nuclear power plants in order to get one because nine you know will get nick. So I don't know how much actual politicking was involved. There's probably a lot, but maybe we should do a short section on underrated overrated, and then we'll do that and have a couple of final questions. So you can underrate it, overrate it or you can pass or make some sort of comment. So we'll do it. Overrated, underrated, cycling?

Francesca (45:49): Underrated, massively underrated. I love cycling. I am passionate and odd and a cyclist. So they will say I've gotten a bit more nervous since the pandemic. I think I got used to cycling on the quieter streets and then now I feel like there's a bit more rage. It's a bit nerve-wracking. Maybe I'm just older and more aware of my own mortality over the last couple of years. But it is a bit nerve-wracking. We do need to invest in the infrastructure again. That's something that just feels like an absolute no-brainer to me. It's huge public health benefits. It's got huge environmental benefits but there's no bloody bike racks anywhere.

Ben Yeoh (46:35): Tricky, doesn't it?

Francesca (46:36): Again, that feels like a, you know, but the problem is that's not an instant deterrent. That's just a minor rotation for someone like me who might not cycle cause I know I'm going to have to spend five extra minutes finding a bike rack, but just things like that, there's the subtle hostilities to a population.

Ben Yeoh (46:55): It should be a systemic thing. Like let's just not steal anyone's bikes.

Francesca (47:00): Yeah, exactly. Collective understanding.

Ben Yeoh (47:02): Great. The settlement movement?

Francesca (47:06): Ooh underrated. I don't think anyone really knows what it was.

Ben Yeoh (47:12): Well, tell us.

Francesca (47:13): So and I probably won't get this quite right but the settlement movement was about essentially immersing institutions of privilege in disadvantaged areas and creating long term structural bonds between advantage and disadvantage and I think there's also more-- I think perhaps it was religious and origin, so I think there's--

Ben Yeoh (47:53): I think there might have been a touch. Everything was two or 300 years ago. And you still work with Cambridge House?

Francesca (47:59): I don't know. But I must say that was my first non-exec position and I do still say that is the most I've learned in any role, I think. I mean A, because the chief exec Karen Woodley is an extraordinary woman doing incredible work. So, so, so inspirational and the hard work that that team did, being right there as a board member, seeing how hard everyone worked was really impressive and actually it was interesting because they had a big social investment debt, which possibly wasn't, can I say this? I think so. It was very early on in social investment and I'm not sure that the whole process was necessarily--

Ben Yeoh (48:51): Figured out.

Francesca (48:52): Yeah, exactly. So it might not have been the best thing for the organization. So, building a market and also seeing it from the other side was really valuable to me.

Ben Yeoh (49:03): Great. The concept of stakeholder capitalism.

Francesca (49:08): Yeah vital, I think. I mean, it's kind of what I was saying earlier about the power dynamics and money having all the power and how we need to shift that really because it's not working for anybody but it's interesting because we've had shareholder capitalism for a long time and it's inertia is a real thing. Yeah, I think it's underrated.

Ben Yeoh (49:43): Fair enough. And then the last in this section is the social model of disability.

Francesca (49:49): Explain to me a little bit about what that is so I don't get that wrong.

Ben Yeoh (49:51): So the social model of disability is this idea that I guess, if the system were to become more fair to disability or actually a lot of other minority groups which you might put on that then actually you wouldn't have a problem. It wouldn't even be considered a disability. I would do a tiny little kind of, not necessarily as relevant discussion, but for instance, if people who are very sensitive to noise or something like that, which might be if you have ADD or ASD or things like that. And so, if cafes were generally designed so that they wouldn't be noisy loud music places, but there was a bunch of them, or most of them were even designed that they were sort of quieter or had those space, which were then I guess the ideas of inclusion come from that but it's not therefore then the person who has noise sensitive challenges, but it's the social model because actually that's not how cafes and things are designed and you can go on and on about things within that. I guess I was just opening up this idea of how much either within social investment things is the systems led thing where we need to maybe touch on moving the system a bit, or how much, I guess you could do by redistribution of the system, which is obviously another way of getting fairness. But actually if those cafes never change, then you could give, again, this is a slightly silly toy example, but you could give noise sensitive people as much money as you want. They're still not going to be included in cafes.

Francesca (51:28): Yeah. I think it's really complicated. I think that it's a lovely idea. I think it is hard to implement and I think you have a lot of variables. I think inclusion in itself is complicated. It's a really lovely idea. It can mean that adaptations are more minimal. So for example if you are a vision impaired kid going to a mainstream school you are more than you might be at a vision impaired school, you are doing a lot of work to navigate a space that's not designed for you.

Ben Yeoh (52:18): And you can make reasonable adjustments by putting that in quotes, but they're only going to be to a certain extent after.

Ben Yeoh (52:25): Yeah. And you've got to work out who it's for. I don't doubt for a second that it's really, really important for all the other kids in that school and that there's a huge benefit for the other kids in that school to have a disabled kid and they will come out better people. But whether that child is somehow paying for it in their labor, I think it just needs to be thought about, I think. I think with anything that feels like there's an obvious answer, there's probably more to it.

Ben Yeoh (52:56): Maybe the answer is always complicated.

Francesca (52:58): Yeah. The answer is always complicated.

Ben Yeoh (53:01): Last couple of questions: future projects, or what are you working on now? What do you hope for in the future?

Francesca (53:07): Well, I was completely forgotten to talk about our international project, which is one of the-- So one of the great privileges at landing somewhere like Nester and having Nester email address is you can pretty much email whoever you want and--

Ben Yeoh (53:19): They reply.

Francesca (53:20): Yeah. And also people got in touch with me. So as soon as we launched the arts impact fund, people would talk about it or get invited to speak about it at conferences and then two people got in contact. I think one of them, called Laura in New York who runs something called Upstart Co-Lab. And Carolina - Both of them are remarkably eminent women who sort of, you know-- One is a consultant, one a lawyer who worked with Rockefeller and both actually ran for a time or were involved in the senior leadership team of their national endowment for the arts. So in Argentina a really interesting model where that's funded specifically by the creative industries. In the US as you know, it's sort of like a very, very small version of our arts council, not a public priority, certainly not under the previous administration. Anyway, I got to meet these two incredible women. I think, hang on, I need to introduce them to each other. We have a zoom called probably halfway through 2019 and we say, look, we're doing these similarish things, we are coming up with the same problems, A, let's stay in solidarity and speak to each other about the stuff we're doing and B, why don't we do a project together? So we thought, well, I'd like to showcase--

Francesca (54:40): We all care about the amazing power of the creative enterprise to do good and the under-acknowledged social impacts of the creative economy and actually globally it's a big disproportionate employer of women, indigenous people, and the craft movement. So it's really powerful, but it's not named in the SDGs. So it's kind of almost like a quiet agent of impact but we want to tell those stories. So, Carolina is like, well, we know amazing people in South America. Laura knows lots of people in the states. We tried to gather some stories from Europe and we've launched this platform called creativity, culture and capital, which is by September, which would be our third launch of essays, we'll have a hundred stories there about the positive impact of creative enterprise around the world and the interesting ways that people are funding 

that.

Francesca (55:35): So for example, Orange Bonds in Columbia and that is something that I really want to take forward. We're looking about how Nesta has funded it so far, but it's mainly been funded by the most extraordinary number of voluntary hours from the three organizations, particularly our partners in Buenos Aires and the US, not to mention all the people who've written their essays for free and contributed their time. So, I would love to build that into, you know, our challenge now is how do you gain critical mass? How do you turn that into a movement? How do you turn a platform and a story into a movement? I mean, I think probably getting a global fund that was focused on the creative economy is of course getting the money first and then everything else is easy but that's something we are sort of looking for partners to take forward and I feel really passionately there's a huge opportunity there. And yeah, there's loads of stories to tell, there's lots of opportunities for investors to invest in really exciting projects with really powerful impacts and or to structure funds or bonds that will do that on a kind of portfolio basis.

Ben Yeoh (56:52): Excellent. So final question. If people are looking to make an impact in their life, say maybe their career or what they're thinking or doing, what advice would you have for them?

Francesca (57:10): I think that this is a reflection on life and society and where we are today. Trust is underrated. I think I just behave in a trustworthy fashion. It's a long termist thing. It's not freewheeling, can we get away with its culture at all, but ultimately for the benefit of the planet of society, just be honorable when it's not an easy thing to do. And yeah, be appreciative, be positive. I think if you can look at the things you do have, rather than the things you don't have and be mindful of making other people's lives better and that being a sort of driving force in what you try and do and how you behave. I think the other thing I'd say is that and I worry about this as a message cause it might sound exhausting, but everything matters, everything you do matters. It matters consequently and it matters because you know that you've done it and it becomes part of yourself image and part of yourself belief. So, don't be glancing about the things you do, do think carefully about stuff. Is that the kind of thing you meant?

Ben Yeoh (58:31): Well, it sounds excellent to me. Be trustworthy. So on that note, Fran, thank you very much.

Francesca (58:39): Thank you, Ben. Thanks. It's been a real pleasure.

Ben Yeoh (58:42): Excellent. If you appreciate the show, please like, and subscribe as it helps others find the podcast.