Eric Collins is the visionary Co-Founder and CEO of Impact X Capital Partners. Through his work, Eric embodies the transformative power of inclusive investment, making him a pivotal figure in the movement towards a more equitable and innovative business ecosystem. Join us as we delve deep into the impact of investing in underrepresented entrepreneurs and how it can bring about systemic social change, spark innovation, and provide a competitive edge in today's business landscape.
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Brought to you by Re:Co, an ESG Software as a Service company helping clients achieve resilient competitive advantage in the long term.
Produced by Chris Attaway
Artwork by Harriet Richardson
Music by Cody Martin
Eric Collins is the visionary Co-Founder and CEO of Impact X Capital Partners. Through his work, Eric embodies the transformative power of inclusive investment, making him a pivotal figure in the movement towards a more equitable and innovative business ecosystem. Join us as we delve deep into the impact of investing in underrepresented entrepreneurs and how it can bring about systemic social change, spark innovation, and provide a competitive edge in today's business landscape.
Related links:
Click here for the episode web page.
For more insights straight to your inbox subscribe to the Future in Sight newsletter, and follow us on LinkedIn and Instagram
Brought to you by Re:Co, an ESG Software as a Service company helping clients achieve resilient competitive advantage in the long term.
Produced by Chris Attaway
Artwork by Harriet Richardson
Music by Cody Martin
Eric Collins: Muscle tone is created through resistance, right? There's something against which you need to push. And in many ways, the more that you push, the more muscle tone you get. I think the same thing happens in the context of entrepreneurship, that the muscles are built from the environments from which people come.
And some of those environments have had a lot of resistance that has led to the creation of a super set of muscles.
Jenn: Welcome to the future and sound podcast. I'm your host, Jen Wilson.
This is a podcast where we talk about prioritising people. Planet and profit. In each episode, we speak with world leading experts who help us see the future we want and our role in it.
This is episode 24 diversity advantage.
Eric Collins is the co-founder and CEO of impact X capital partners, a venture capital firm, investing in underrepresented entrepreneurs in the UK and Europe. Eric is also a serial entrepreneur and technology executive who has worked with numerous innovative companies and invest in fast growing businesses helping Black and female entrepreneurs get the jumpstart they need.
In 2011, shortly before making London his home, Eric was appointed by President Obama to the Small Business Administration's Council on Underserved Communities. Since then, the FT has placed Eric among the UK's top 100 leaders in technology from a minority background. And he has also been included in the power list as one of the most influential black people in Britain.
Eric has also appeared on Radio 4 and Sky News, and in the FT, Fortune, Forbes, Bloomberg, Guardian, The Times, and Sunday Times. And hosts channel four's award winning business reality series, the moneymaker, Eric, welcome to the future and sound.
Eric Collins: Thank you for having me, Jen.
Jenn: It's just such a pleasure to be in this conversation with you. One of the things we connected on initially. Um, at a conference discussing diversity was this request from the conference organisers to start the conversation by illustrating the value of diversity. And it was interesting because, you know, as a group, we bristled a little bit at the idea.
Like, are we still having to, you know, provide statistics to say this is important. And at the same time, I think that, you know, I was thinking about sort of where, where we start this conversation, maybe we can just take it from that angle. Like, you know, when you get asked as a leader and private equity on the value of diversity, you know, how do you answer that question?
And has that answer changed in the past couple of years?
Eric Collins: It’s an interesting question, Jen, because I do believe that depending upon where you are on the continuum, we think about people who are sort of fully immersed in a world that says that there are all sorts of advantages to having it. A group of people around the table, particularly in decision making capacities who think do and do differently, and have had different sets of experiences all the way to people who think that the, the way that you get the best results is from people like me.
And so think about that as a continuum, that we are looking at two things which push us way down toward the, the, the first portion of that continuum, meaning that we talk about in my business, impact x. Um, capital partners, which is a venture capital firm investing in underrepresented entrepreneurs in Europe and the U.K. And it's that word underrepresented that for us is so critical in two ways. We think about this. We're in a very competitive space where differentiated deal flow is extremely important. Yet what we find is that folk are pursuing the same sorts of deals, and we know that the majority of those Hypotheses that are then being tested result in track records, which are not exceptional.
They really are not sort of delivering, you know, the risk adjusted returns that you need in venture. They're not getting that three X return in three to five years. So if that's indeed the case, and people have been following that strategy of sort of follow the money, follow the crowd, we believe, and I think in terms of most organisations, at least when they Particulate what they want to do.
They talk about differentiated deal flow and that they value that. We have differentiated deal flow. That's the first piece. Secondarily, it's a question of where do you get differentiated deal flow? So underrepresented is defined as looking at the portfolios of other venture capital companies, our peers, so to speak, and seeing who they don't invest in.
And then saying, that's where we should be looking because. Our overarching belief, and I think most people's overarching belief is that smarts, ambition, creativity, innovation, disruption are equally spread among all populations, no matter what your demographic. Distinctions are across all demographic characteristics.
There is ambition. There's innovation. There's the ability to disrupt. And then the question is why are organisations not doing that? Who are our peers? Why are venture capital companies not necessarily doing that? We don't care about that answer. What we instead do is say, well, that gives us an opportunity to find.
By combining that with the first thing that I said, which was the differentiated deal flow, we then find a market inefficiency. And that market inefficiency allows us to do both things to actually identify and then to invest in underrepresented differentiated deal flow.
Jenn: And I'm really interested in going through an example of this.
And I'd love to also get your reflections as an individual, Eric, you know, looking at a new potential target prospect for your fund. You know, if we get into a real example, how you identified and sourced, um, that opportunity differently, the kinds of skills or sort of the lens that you applied to be able to see opportunity where others might miss it.
Do you mind if we walk through an example of that?
Eric Collins: I would love to walk through an example. Now there is an organisation in our portfolio. That is now known by everybody in the UK and, you know, a good deal of Europe. We just, we started from an impact. That's, we have two different approaches to finding our pipeline.
So the deal flow that we have, one is a reactive approach where we try and let people know that we're out there investing and you don't need a warm introduction in order to. Instigate our process. And so we were able to do that by using a form online, and then people can come to that form. They can fill in the particulars around the organisation, which is really the questions are breaking down the criteria that we use for determining whether or not we are interested in looking at this company now and how well they actually satisfy our initial criteria.
So you can do it that way. And It's a democratisation of access to institutional funding because quite frankly, most people are not interested. Most venture capital firms are interested in organisations that are introduced to them by their network and their narrow networks that they've had their entire lives, which they feel are successfully delivering them opportunity.
They continue to stay there. Ours is, you know, democratically have access to, um, uh, institutional investor and let us know why you think that it makes sense for you to be in our process. Then. We also have a proactive approach, and the proactive approach is we make a determination where you have a theory or hypothesis that there is an opportunity for outsized returns, venture scale, risk adjusted ventures, venture time returns.
If what we do is we look at the following industry, we made a determination. Back in 2018, 2019 was when we were first getting started with our first fund that indeed the insurance industry, so FinTech in the UK and Europe is obviously at a gold standard around the world and drives a lot of innovation.
We decided that there was one area that didn't have as much innovation and that was insurance. And so looking then at insure tech companies, and then we needed to make a determination having already made a cut, you know, so we filter out people that really aren't underrepresented. And then we said sort of within those underrepresented people.
And now cross Fintech has a big category. Where are the people who are disrupting insurance? So we've identified in Europe and the UK about 25 companies. And so we went through an initial screen of those. We whittled that down to about five companies. We then looked at those and did a little bit of diligence, passively in the background.
We didn't necessarily engage with them very much. And then we found two of those companies that really rose to the top as satisfying our criteria and that we felt had the metrics associated with the future growth. One of them was an organisation called Marshmallow. It's a UK fintech company in the insurtech space that started out, uh, helping people who are expats who have come to the UK to be able to acquire.
insurance, automotive insurance at a premium that is not five times what a local pays or someone who has a driving record that has been established within the country and is able to be easily tracked this solution with a little bit of AI and some scraping of all sorts of data from other jurisdictions, connecting that to an application and then, and then those two things allowing people to have.
A reasonable evaluation for their auto insurance was started by two young Brits, they're identical twins, and they are Jamaican British. So here we have a company that fits into our thesis of what we think about as proactive Identification of opportunity. They fit into our thesis of being underrepresented as founders and beyond that, they actually then did a number of other things.
They were revenue generating. We got into the 30 million pre money valuation. 18 months later, they were to 1. 2 billion. They have continued to grow. over time. They're only the second black unicorn here in the UK. They've continued to grow over time, doubling in size very frequently. They have been able to maintain not only having gotten to EBITDA positive back in June of this year, 2023, they've also been able to maintain the 50 percent of their staff.
Is women is made of women and then 20 percent of people of colour at key roles. That means the C suite, the board P and L responsible roles as well as the engineering organisation. So this is the type of organisation. We really want to see the return on the investments is very good and venture scale.
They are also doing as a, as the second part of our double bottom line, because we are a double bottom line venture capital company. They're creating jobs and they're creating jobs that are these future resistant and important jobs, not only for making sure that they hit their milestones and exceed expectations, but that they also are producing the next world of entrepreneurs who will start to spin out their own companies or colonists who go to other organisations and then be part of those because they have a great pedigree and people are then snapping them up.
Company, which is called marshmallow was named by the financial times earlier this year as the second fastest growing company in Europe, not the UK in Europe. And the two founders, you know, two British Jamaicans are number 51 and 52. On the list of wealthy tech founders, and then if you look at their cap table, sort of who has actually come into those rounds, not some of the normal names you'd see in Europe who really want to identify every unicorn, and that's where the rub comes, right?
It's not as though they didn't talk to those organisations. Those organisations made a determination not to make an investment. And this is an organisation where the metrics are such that, you know, it leads to the kind of returns that these organisations want. But is there a demographic bias which exists that advantages us in terms of being able to sort of, maybe with our own demographic bias, see value there?
Or is the demographic such that those other organisations and our peers are unable to fulfil what I would say is part of their fiduciary responsibility and therefore missing opportunity because of that? So that's an example. Does that help?
Jenn: Interesting that, you know, we're talking about advantage and I want to come back.
Not only does it help, but I'm sitting here thinking, I mean, it's such a big problem in the market. I'm sitting here thinking being a Canadian living in London. I'm like, I mean, the amount of credit you get. You have at home and can bring over, like, you know, across the ocean is very limited. And, you know, that applies to everything, whether you want to buy a car or get insurance or, you know, take it or credit.
I mean, it's just such a massive market and, um, I'm really interested in, you know, a couple elements of advantage. So you have your advantage, you know, taking a look at, um, opportunities and seeing them before others. And I can't help but think, you know, There's an element of if founders are overcoming more adversity, they're likely to have more resilience, which will pay dividends in the future.
I don't know if this resonates, but if more hurdles are overcome over time, I'm just thinking about, you know, people from underrepresented, you know, backgrounds or in tech, you know, women of all different backgrounds. Um, I don't know if this resonates, but if more hurdles are overcome over time, I'm just thinking about, you know, people from underrepresented, you know, backgrounds or in tech, you know, women of all different backgrounds you If you're overcoming more to get to that position, you probably had to fight more to get into that position.
Therefore, you're likely to continue fighting and being resilient as you move forward. Is that sort of part of the lens when you're looking at founders and thinking, I see an opportunity here and others might not see it?
Eric Collins: I don't know what you think about, um, sort of theories of, um, fitness and wellness, but muscle tone is created through resistance, right?
There's something against which you need to push. And in many ways, the more that you push, the more muscle tone you get. And then that muscle tone becomes muscle memory and helps us with all sorts of things. As I'm getting older, I'm spending much more time trying to figure out how to maintain muscle so that I can actually stay You know, so I'm not throwing out my back and other sorts of things and sort of working instead of everything being massaged and sort of strengthening in order to make sure that, you know, I can sort of sit up straight and hold myself and, you know, stand up and sit down from a chair.
I think the same thing happens in the context of entrepreneurship, that the muscles are built from the environments from which people come. And some of those environments have had a lot of resistance. That has led to the creation of a super set of muscles. And we notice it at a time like this, that we find ourselves, I started my first business, my first technology business during the.
com boom, but really the. com bust, so I got to see that cycle, I was working in a technology company and C suite exec during the credit crisis. I was running a venture capital firm during the time of COVID, during the time of the rampant cost of living crisis, and as well as, uh, fast moving inflation, all of which means that I have been through a number of business cycles and downturns, and I seemingly have been able to survive those.
And so the set of muscles that I have from that experience, I think is very useful and likewise, are entrepreneurs. Who might not be as old as I am and therefore didn't have all those cycles, but who have had some other equivalent experiences. I do find that women, I do find that people of colour are people who then tend to do things a little differently.
And I think part of this is not just the resistance that they face that we would think about, but there are other resistances. So for instance, you know, if you are a black entrepreneur who has the same, the same company stats, turnover years in business. Credit score, all sorts of other things as, um, your white counterpart.
If you're thinking about going to a bank to get funding for your SME, and I know some of your listeners are small and medium sized enterprises, you're four times less likely to be able to get that in the UK, four times less likely. Interesting statistics. So that means that's not available. So you have got to, in response to that, since you've decided to be an entrepreneur, you've decided that you have to figure out another way, which is not bank financing.
That's one example. Another example would be if you're a black, I'm just going to use this subcategory of underrepresented black because we invest in all sorts of underrepresented people and that makes our, our, um, pipeline even more robust and interesting. If you are a black person here in the UK, again, reverting back to that, um, underserved community, one in two black children in the UK live below the poverty line.
That's a 2018 statistic by the government. And then indeed, if you fast forward again through COVID and the cost of living crisis and rapid Think about that. So that means most people are growing up in poverty who are, who are black. And that means their families, their families aren't rich and they're poor.
It's like the, so that means their families are poor also. So if you're thinking about savings and that sort of thing that can be used in order to fund a business and therefore friends and family. who might be able to help you within the startup phase for business as that initial round for venture capital seeking and fast growth companies.
You'll see that that means that those individuals are relatively unlikely to be able to raise that money. So again, what does that do to your business model? What does that do to your question of what you do for resilience? And then let me give you one example, then bring it all together. And the final example is then if you look at the housing market, Most people's wealth is held in real estate.
So the real estate, particularly in which they live in the UK, 74 percent of Asian Americans who are Indian Brits own their own home, like 68, 69 percent of white Brits own their own home, 30%, somewhere between 20 and 30 percent of black Brits own their own home, meaning that indeed, if you don't have the money, because you are poor, if you don't have assets.
Which you can then draw upon and then take some money and get borrow and collateralize it with your home, which is your biggest asset if you don't have the ability to go to banks because they're not going to lend to you anyway, even if you have a track record in business and the like, then you're sort of sitting in a place where you have to think very hard about how do I make entrepreneurship work for me?
And on top of it, if you're going to go to an institutional investor, um, That institutional investor is going to expect to see many things with the assumption that all this capital has been invested beforehand. There have been friends and family to help you. There have been an angel around, which probably doesn't exist.
A bank loan, something, you might have gotten a non dilutive grant. That expectation then comes into, so how, so where are you? When we find people are successful in this scenario, we find that what they have done is that they have choosing models for their business, which are relatively durable, which then makes them very interesting in a time and bring this all back to the beginning in a time like we're in now, another down business cycle where if you have never had a bunch of money thrown at you.
If you've never been able to go back to those same sources, you probably have come up with a different business model anyway. And those business models in this particular economic market are ones that are seen as being very attractive. If you've been able to show growth. year over year, and you actually have gotten to this point of an inflection.
And it also puts you in a more powerful position for negotiating what should be the terms of your term sheet, like what should be your valuation. But we're finding in our analysis that women and people of colour have come up with very creative solutions to the funding in the first place. They'll take that muscle memory with them from their resistance, and they then utilise that.
To build these businesses and in downturn, they are very good people to bet on because they have the likelihood that they never even experience another, another day. It's just a little bit worse than it had always been, but they are ready for, to weather this particular storm.
Jenn: I love this muscle memory idea. I think that's really brilliant. I'm interested to dig a little bit more into I guess your muscle memory, Eric. So you've talked a little bit about, you know, the lens that you've applied and sourcing deals, um, having been through sort of the ups and downs of the tech bubble in the early 2000s, late 90s.
If you take us back, you know, was there a moment when you knew that you wanted to start a fund or was there. So a moment when you sort of realised that there was an edge, you were inspired to go in this direction of backing businesses that had, that had a different approach to creating competitive advantage.
Eric Collins: That's a good question, Jen. I've had to re-evaluate my life recently because back in 2021, I wrote this book called We Don't Need Permission. The tagline is, or the strapline, as they say here, is how black business can change our world. And that manifesto is about the way that business is a tool of social change.
And capitalism can be harnessed if we get the capital into the hands of the right people. And my definition of the right people are people who have an other experience. So they're underrepresented in decision making circles and that sort of thing. So when we put the capital into the hands of women, people of colour, to build large scale businesses that within a generation can change the centre of gravity, then we have a social change tool that has never existed. And it's so powerful that indeed we can undo substantially and sustainably some of the issues which continue to plague people and have us having to create that very, very Costly muscle memory. So I've had to think because of this book, I've had to think, so when did I figure this out?
I've been talking about venture capital and you, and this, I think people consider this strange, but I've been talking about since I was in high school and I was in high school in the eighties, I've been talking about. The idea that venture capital, I don't know where I first read, maybe it was a black enterprise, which is a business magazine still existing.
Um, that is sort of the Bible for black business, particularly black businesses that rely upon other the black population in the United States for their revenues and customer base. Maybe it was in business week because I used to subscribe to that, even when I was a teenager, that's what I got for Christmas.
That was my business week subscription. I don't even know if there's still business, but I would spend time on those sort of publications. And I'd read about these people who are so far away from North Carolina, suburban Greensboro, North Carolina, where I was, who were doing things in. Magical places like Silicon Valley and in New York and in Boston and, you know, in Paris and in London, and there was this thing, this, this venture capital.
And when I read these, it wasn't that I was looking at these people as individuals who were granting wishes, you know, these are the fairy godmothers of the world instead. It looked to me, and it became clear over time, that these were individuals who controlled pools of capital, and the pools of capital could be put to use for a discrete period of time to engage a discrete number of outcomes, and that those outcomes, when measured, Would be something that would allow them to do another set of activities with more capital if indeed things went well and quite frankly They were then creating they were like fairy godmothers They're creating magic and that was these companies that came out of nowhere with innovative and disruptive ideas And could go from being a nothing to being a brand that changed the centre of gravity within a generation I mean, I don't, it didn't all come together in high school.
It didn't all come together in college. It didn't all come to university here. It didn't all come together in law school. It didn't all come together in the beginnings of my career, but at some point it became very clear that private capital invested well in the creation of other companies could actually drive a tsunami of so called social change could wipe away a bunch of other things. It's not a panacea, but that it had the potential. Now I look at names like Jeff Bezos. When I started out, that didn't exist. Amazon didn't exist. But when they, in 2021, have 1. 5 million employees around the world, and I can only imagine how many law firms they employ, how many consulting firms on a daily basis, how many accounting firms and financial advisors, and all those organisations which struggle, or at least they tell us how much, how hard the struggle is to find people to be in their organisations. If we can get a woman from Birmingham or Bristol who's starting a company that can that can scale to the size of You know, one of those organisations, that organisation, because women and people of colour tend to over index in terms of hiring and promoting women and people of colour, puts capital into different hands, puts the desire to work for those, those magic circle law firms, those big four accounting firms, those many, many, many different consulting firms, such as, you know, with names that we all know, Those firms if told that the only way we can work with you is if you share our values, they will come to a different conclusion than the conclusion of it's hard, we need to start people at the bottom in training programs in order to be able to work with the big organisation we want to work with, where they're going to be doing mergers and acquisitions, they're going to be doing public listings, they're going to be doing dealing with treasury issues.
And then beyond that, those same people who are then growing up in these organisations and having key roles also will have capital. They can invest in political campaigns. They can then back all sorts of initiatives. So a holistic solution to a problem became clear to me. That sort of controlling and creating more capital, putting it in the hands of the right sort of people, and then letting them do what they want.
I don't have to control that, but letting them do what they want can actually change the world. And I do believe that when the people of colour having that capital in their hands, make a different set of decisions that we see it all the time. It's like, we're not all alike in the way we view the world.
And certainly we don't view the world as a place that's so sensational. The status quo doesn't need to be shaken up.
Jenn: It's so interesting. I'm sure you get this all the time when you're talking to founders. You know, who are either female or come from a diverse background. What you're saying really resonates in my experience, you know, founding Re:Co.We tend to work closely with, um, value creation professionals and private equity funds on sustainability and those roles. And it's not just. You know, classic ESG and heads of ESG in some cases, of course, we're talking to heads of ESG, but often it's members of deal teams or, you know, people who are in operations, et cetera, who are much less likely to be female or from a diverse background.
And I can tell you that well over 90% of our leads into these organisations are women and people of colour. I'm sure you just hear a lot of this reflected back to you, Eric. You know, obviously, there's a challenge with that, right? Especially for starting with a very small percentage of value-creation professionals who are female and coming from minority backgrounds, but it really is an effect that I've seen in my anecdotal experience. It's a real thing. And, um, some amazing female and diverse leaders have really made our business happen really. Like, and so I can say that, you know, that sort of system, it's almost like you're talking about a systems change that's required and being a catalyst for that systems change.
Eric Collins: I think, and we, you and I both agree, we're not working in the not for profit world. You and I are both working. And that's, and, you know, I believe in philanthropy. I believe in all those sorts of things. However, philanthropy and philanthropic activity has been around for, you know, generations. It's been around for centuries.
It's been around for millennia. The question of, and yes, certainly we understand the, the, the statement that we will, the poor will always be among us. And I, and I, and I assume that we believe that that's actually true. I haven't really interrogated that very much. However, the tools that we have been using continue to remain persistently and sort of doggedly the same and the one thing that we have not been able to do and I understand people wanting to climb the greasy pole of the corporate world because there's so lovely advantages of doing that. Um, being an entrepreneur, you have to have something just a little bit.Something is a little bit off for you to think that what I can do is I can do something that no one else has ever done with money that other people are going to give me with customers that have never thought about this thing necessary before. And I'm going to grow it to be such an entity that is actually going to be remembered in history.
That's, uh, you know, it's, it's, if you were going to your therapist and saying that, and you know, they might say you have sort of a messianic sort of a problem going on. But, you know, we find lots of those people, right? We see lots and lots of those people. And I'm glad when they're, particularly women, I'm glad when I see Kathy Hughes.
I'm always glad when I have seen Meg Whitman. I'm glad when I see, um, Pat McGrath, all these, you know, women who have done these fantastic things. Now, in terms of, can we actually make a change if we don't change the tools that we're using and trying to climb, again, the greasy pole within a corporation, You know, it's like trying to become, and trying to become the CEO of, you know, one of the big banks.
That is so fraught with, with pitfalls, and it's so fraught with microaggression, the idea of actually getting to that, and sort of our own life choices, that it just seems as though there are other ways, especially if you're not sort of a person who, from a collegiality perspective, is going to be accepted in all sorts of places.
Trying to, Change the underlying behaviour, which are systemically baked into those organisations and into the psyches of the people who are decision makers. I think you have to consider, do you have the energy for that? And that fight, which is going to be constant, consistent and highly integrated into the very Systems as well as into the very psyches of the people with whom you're talking to now, it's no easier if you're going to be an adventure in a venture backed position because you still have to go to funders who have those same sort of issues.
However, what I do think is that within the context of there, we have, we have as much focus on the absolute metrics associated with your work. Those metrics are, do you have a product? Is the product actually, is the product market fit? Are you being able to scale? Have you been able to utilise the money wisely?
And there are going to be all sorts of additional pitfalls that women and people of colour have, but if you are able to show those sorts of things, you can build a behemoth. And from that behemoth, you are able to do a number of things. I find that the idea, and this is why we've had so few women and people of colour, And I mean, there have been more people who have been named, who are John, who have been named John, who are CEOs of Fortune 500 companies than are the number of women who are, who are running Fortune 500 companies.
So white men named John, there are many more than there are women who are running Fortune 500 companies. So insofar as that, we can see those sorts of dynamics. Why don't we try a different strategy? And that's why I believe that the approach that is more metrics based, that is more merit based. And allows you to bring more of your authentic self to the workplace and allows you to build cultures that are sustainable cultures and new and improved cultures that haven't existed before, and don't have you necessarily imitating and miming, uh, sort of what others have done before, but trying to, because your whole space is disruptive space, disruption is just what you can talk about all the time.
Difference is what you can talk about all the time. Better is what you can talk about all the time. It just is a narrative that works better. For people that I'm talking about women, people of colour who really want to change the world. It is a tool to leverage very well. Absolutely.
Jenn: It's interesting. We've talked about a couple of the competitive advantages related to sourcing women and people from diverse backgrounds, maybe having more of an eye toward, you know, navigating a downturn in the economy.
I wanted to turn our minds just for a moment to innovation. You know, one of the stories that, you know, you and I were talking about, um, just after the panel that we were on together, where I think at least I felt like, you know, we connected was just, um, the story of Edward Enninful taking over Vogue and how the magazine changed immediately.It was not gradual. It was the first issue that he edited completely transformed and reached a market that, you know, had not been reached. And it just really was like a core sort of diversity was part of the core innovation for the product. And drove that growth, elevated that growth. And I'm wondering, you know, that's obviously a really powerful example, but I also think for listeners, there's a difference between that something core that's going to tap into innovation and something that's sort of, um, window dressing, right?
Right? Like, oh, we have this diversity program and we have a couple interns that come in and you know what I mean? And so I'm just, I'm really interested, Eric. I'm just, I'm interested. So, um, You know, for our audience, when we're thinking about really using diversity, um, or analysing the extent to which diversity exists and therefore predicting innovation potential, what are some of the tools or approaches that you use to assess whether diversity is inherent to the structure of a small company or a scaling company, such that it will give advantage in the future.
Eric Collins: I want to say that I use brute force, but I would say that Impact X has adopted a collaborative approach. What we do, so we, of course, are analysing organisations that we believe have a certain sort of a tendency and have proven that ours is we invested series a and seed extension. We're not precede argument. We don't do precede investment so that for us, we are looking at some de risk opportunities that are coming to us. And when we do a deal, we have every company to sign a. side letter and the side letter has a requirement of various pieces of reporting.
This is even when we don't need a deal, but it also requires them to report on the second portion, you know, the second portion of our double bottom line. Who are your employees and where are they sitting and how is that changing quarter over quarter, year over year? And when you have done that and you have measured and quantified and you've quantified what the base state is today and sort of what's the delta in these future quarters, it helps us to see and identify early when there might be challenges.
I think many organisations feel that you might be able to start one way, but over time you switch to another. So if you start off with a team that's made up all of black women that you know, you've created a, um, A fintech organisations, all black women that ultimately you're going to have to find a CTO and a CFO who's not a black woman and that indeed, so the concentration will change.
And sometimes that might actually be the case will be noted in our most successful companies using the side letter approach is that those companies that are most successful continue to have all of those sorts of demographic distinctions that are represented in their growth plans. And I think in many ways, it's a network.
It's a show. We also, so we bring it. A light. So we shine a spotlight on it through the side letter and make it part of a legal agreement between us. I think it's also that we expand the conversation about what your network is. And for the organisations in which we invest, the networks are made up of people like themselves.
Again, women and people of colour tend to over index in terms of finding competence and ability in women and people of colour. So therefore they don't have this pipeline problem that so many people talk about. When I go talk to groups, I say, you have a network problem that you can solve. You can solve it by hiring different people who know other people in the world and rely upon different people to help make decisions.
And you do that at the top level, as opposed to starting off at the bottom level. You can also hire third party organisations that are helping you in executive search and then, you know, just search in general. Find those sort of people who and organisations that actually do have those developed and robust pipelines, not that they know one or two people that keep on getting recycled, but that they have a whole pool of deep talent in many different areas.
And the third thing is that you hire more than one person at a time. You don't hire a single person and think that that person is going to who stays in the organisation now 30 years to get to be the head of that organisation. People look for a variety of experiences. And so. Let's find then a group.
Let's put together a cohort so they can come in and sort of support each other and have that group come in together of, you know, say, black women to be part of the organisation. I think that but I think that's those are some practical tools that people can use. I would also use brute force, though, and I would use the example of aerial alternatives that they did a project called Project Black.
They were looking at supplier Diversification for Fortune 500 companies in the United States, there are very few organisations that have sufficient scale to be able to deliver the kinds of needs on a daily basis than organisations as large and complex as McDonald's has or as J. P. Morgan has or Amazon has or eBay has.
So how do you actually get the kinds of companies who are women and other minority created and over-index for how do you get those into these opportunities, the flow of opportunity. And so what they did was they raised 1.45 billion their cornerstone investor. I think it's JP Morgan. This is a black private equity firm out of Chicago, um, highly tied to the Obama family and the Obama administration.
But they then buy companies they, like all private equity companies, do they go take a big equity stake and then they, what they do is not only sort of do a turnaround in terms of your, your, your policies and approaches and your systems and operations, they also do that in terms of who's in the organisation.
So they have found that, you know, by going in one of these organisations, organisations that struggle to have 2%, 4 percent black people suddenly has 41 percent black people within a year because they take, they, they reconstitute the board. They reconstitute the operating team and guess what happens, a lot of other things.
And that's kind of the example that you gave with Edward Enninful, who I think is a masterful example because of not only what he did at British Vogue, but then it's interesting to note that British Vogue, he's now moving on, as of March, I believe, there's someone else coming in, a black woman who's taking his role, and that if you look at five of the other big publications for fashion here in the UK, they're all run by black people now.
So not only did he have an impact at the head. You know, top of the masthead for Vogue, he then had an impact in who else is in the organisation, who's photographer, who's stylist, who's heading up apartments. Then in other organisations, it became clear because of the metrics that were associated, more subscribers, more, um, advertising, more page views, more people coming to the newsstand and buying the magazine.
It's like suddenly we're in a resurgence of something that we thought was a dead Industry print print, you know, fashion, uh, magazines now you can see, so by doing something like that, we're going to change the very nature of the industry. So Elle magazine, Harper's Bazaar, all sorts have now days, they all have, um, black, um, editors in chief.
And that is what can happen in a relatively short period of time. He's only in position from what, 2017. And we've seen this happen already. These things can happen. When people talk about timeframes, I don't have all the time in the world, so I'm looking at short timeframes to see substantial alterations in the centre.
Jenn: Eric, I could ask you questions all day and time has just flown by. This has been a really brilliant snapshot into the important and inspiring work that you do day in day out. The final question that I have. for you is, you know, obviously we're going to do a link to your book, um, and the show notes, but just wanted to ask, I'd love to ask, um, interviewees, if there's a particular book that has inspired you or has really informed your approach to leadership and business that you'd recommend to the audience today.
Eric Collins: You know, back in the 1980s, there was one guy, his name was Reginald Lewis, um, and Reginald Lewis came out of Wall Street. He did a number of deals, a big leverage deal for McCall's. He then went on to buy Beatrice International, which really put him into the international scene. And he, and he built Beatrice International to be sort of number 517 on the Fortune 500.
Uh, just so he just missed the Fortune 500, uh, he died tragically after selling the company. He died, uh, soon after of a brain, uh, of brain cancer. And we don't know what his next deal would have been, but that's the closest we've seen in terms of say a black as underrepresented, a black person who's been able to get to those levels.
He wrote a book called why should white guys have all the fun. Isn't that an interesting title? I love that title. And so it talks about sort of why is it that, and of course, you know, deal making being fun, it's a go go 80s that he's part of, but it's really this question of why is it that we should cede as underrepresented people this category to other folk.
And sometimes those other folk are very much are who we are. Sometimes they're our allies. And sometimes they're not. And so let's not cede that space. So why, why should white guys have all the fun? It is a interesting book. And then there's a second book that I would say it's by a woman named Ursula Burns, who's actually the vice chair of Impact X Capital Partners, my venture capital firm.
She wrote a book called. Where you are is not who you are, the title comes from something her mother used to say that the limitation of your, you know, spot of origin and your attributes, whatever those metrics are that are associated with you and those demographic tags that are, that are associated with you, including address, which has so much to tell us, especially here in the UK about how far you wanna go.
That indeed, that there has to be a way to undo that and her inauspicious beginnings. Which led to her being the first black woman to run a Fortune 500 company at the chair and CEO of Xerox. And then to take that on to do the work that she has done in terms of social change, not only within that organisation, but then within the work that she's done as a board member of organisations such as Uber and Endeavor, the entertainment company.
as well as MIT, where she's on the board, as well as the Ford Foundation. So she has been able to, the Metropolitan Museum of Art in New York, so she has been able to take that, where you are is not who you are, as a mantra, and then make sure that she is working very diligently on all of our behalf, particularly women and people of colour, to, you know, make sure that there is durable, sustained social change.
Jenn: Eric Collins, thank you so much for joining us.
Eric Collins: Thank you, Jen. It's been good talking to you.
Jenn: Thank you, Eric, for joining us. You can learn more about his work by checking out the links in the episode description or by visiting re. co. com slash the future in sound. The future and sound podcast is written and hosted by Jen Wilson and produced by Chris Attaway. This podcast is brought to you by Rico, a software as a services company, helping clients achieve resilient competitive advantage in the long term.
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