The Promise of Purposeful Companies: An Interview with Emerson Collective’s Sarah Pinto
Venture investing will not rectify all of the deeply-rooted issues in our society. Still, the intersection between mission-driven companies and profit-generating companies is large and will grow even larger as these issues become more salient. This is something that Emerson Collective’s Sarah Pinto deeply believes, “The era of short-term minded companies that solely care about making money for shareholders, I think that is behind us.”
A Parisian now based in Silicon Valley, Pinto attended the Harvard Kennedy School, focusing on International Development, during which she worked for the World Bank (IFC). After ten years in investing, with experience in both the private equity and growth equity worlds, Pinto was determined to pursue her passion for supporting entrepreneurs who aimed to tackle important problems in the world. A serendipitous opportunity at Emerson Collective — Laurene Powell Jobs’s organization committed to pursuing a more equitable America — allowed her to land her dream job of investing in companies looking to make a positive impact, which she has now been doing for two and a half years.
I sat down with Pinto over Zoom to discuss Emerson Collective’s goals, the inherent challenges of measuring mission-driven companies' successes, and the importance of supporting the best entrepreneurs.
On your website, Emerson Collective describes itself as an organization that uses a broad range of tools, including philanthropy, impact investing, and policy solutions, to create systemic change. Can you describe Emerson Collective and what makes it different? How do these different arms work together?
Sarah Pinto: There are many similarities between what we do and traditional venture investing funds. We typically invest in the same deals, but we are a very different organization. Emerson Collective focuses on the systems that create barriers to human potential, with this very humanistic idea that in everyone lies much potential. Still, opportunities are not as well distributed due to systemic problems. Laurene Powell Jobs, who founded Emerson Collective, believes that you can’t affect systems with just one set of tools, that change is more powerful if you work with nonprofits, private companies, policy-makers, and artists who are changing hearts and minds on the same issues. For example, we invest a lot in education, and I have colleagues who work in the same field, but we focus on supporting nonprofits, university research, policy changes, or artists. We work collectively and are stronger because we leverage different perspectives on the same issues.
Which type of companies do you invest in, and at which stage?
Sarah: For us, it all starts with people: entrepreneurs and innovators. We are focused on supporting those who are boldly inventing solutions to important problems and are mission-aligned. We are lifecycle investors, so we invest across stages. My partner Fern Mandelbaum leads our early-stage investing efforts, and my role is to lead our growth investing efforts. I have colleagues who focus on life sciences, media investing, sustainability investing — these business models are different enough to have different teams for them. We are quite broad in our focus in terms of stage and sector. We are long-term-minded and can lead or follow in deals.
We work collectively and are stronger because we leverage different perspectives on the same issues.
Is there a field, in particular, that you are most interested in?
Sarah: I spend most of my time in three sectors. The first one is education, from early childhood to post-secondary, to lifelong learning. Our team is focused on preparing people for today's jobs and how we help upskill and reskill people whose jobs may not exist tomorrow. That is what led us to invest in Guild Education, for example. They’re using existing education-as-a-benefit dollars in ways that are much more creative and aligned with student interests. They directly impact frontline workers at companies like Walmart or Chipotle.
The second area is the intersection of healthcare delivery and technology. There, we think about leveraging tech innovation to help bring high-quality, affordable healthcare to those who are underserved by the current system. For example, we invested in Ready, which provides community-based home care and telemedicine to patients, including Medicaid recipients.
The third area is financial technology, specifically around financial inclusion. We think about leveraging innovation to help bring more equitable financial services to middle and low-income Americans. We’ve invested in several companies that help break the cycle of people paying high fees for their bank accounts, leading to them not saving enough money, resulting in paying high interest on credit cards and payday loans.
I believe the era of short-term-minded companies is behind us. Many successful companies are realizing that it is a winning strategy . . . to do what’s right.
How do you think about maximizing impact while also maximizing profit for the investors? Do you think there is a misconception about how public-serving companies somehow clash with private interests?
Sarah: This is something that I spend a lot of time thinking about. First of all, we are venture investors, so we look for models that will scale and generate venture returns. We do not believe that every company solving every problem in the world will fit that model. There are significant problems that can’t be solved with scalable solutions. A lot of our [Emerson’s] work is focused on highly resource-intensive, local solutions that are much more suitable for philanthropy than venture. And that’s why our work at Emerson invites such a range of tools.
Second, I’m very passionate about this idea that the intersection between companies that will do very well and those that will positively impact the world (both in terms of what they do and how they do it) is large. That’s why I took this job, and that’s what we — and others who are in this with us — are out to prove.
I think many of the companies in our portfolio will prove that 1) if you’re actually solving important problems for large numbers of people with a sustainable business model, you will have an impact and do well financially. And 2) I think the companies that will attract capital, talent, and customers in this century will be the ones that have strong values. These are companies that treat their employees well, have inclusive cultures, and consider multiple stakeholders as they make their decisions. I believe the era of short-term-minded companies is behind us. Many successful companies are realizing that it is a winning strategy (with employees, consumers, regulators, etc.) to do what’s right.
What happens when a company is trying to solve a complicated issue with a long history and perhaps layers of legislation tied to it, like in the education and environmental sectors? How do you even begin to predict the success of a company in solving these complex issues?
Sarah: A lot of our companies try to tackle very regulated industries like healthcare or financial services. I believe that the history of innovation and change typically starts with people who are proximate to the issue. Yes, we work inside regulated industries. Obviously, our companies are working closely with the government to ensure that they abide by their specific industries' laws and regulations. In healthcare, we have invested in companies that work closely with state Medicaid organizations or with state licensing boards for doctors. With COVID, licensing rules around telemedicine have evolved, and I think they will evolve more quickly. Even the way that some Medicaid and Medicare agencies see public/private partnerships is changing. There is more openness to things like value-based care, where organizations are being paid for outcomes instead of fee-for-service.
We want to show that mission-driven companies solving important problems will be some of the most successful companies of the next 10 years. We are actively making that bet and pursuing data to prove out that thesis.
What non-financial metrics do you measure when assessing the success of a company?
Sarah: We work with our companies to identify those metrics on a case-by-case basis. The risk with rigid, top-down impact measurement is that you end up measuring the wrong thing. In education, for example, standardized test results cannot be the main metric for every company. We have companies in our portfolio that help teachers be more effective in their student practice through training or coaching. Then, it makes more sense to measure how many teachers a company touches, which school districts, what their NPS is, impact on teacher retention, etc.
What is your vision for your work and your impact in the future?
Sarah: We want to show that mission-driven companies solving important problems will be some of the most successful companies of the next 10 years. We are actively making that bet and pursuing data to prove out that thesis.
To achieve that, we want to attract the best mission-driven entrepreneurs and help them be successful. Our mission is to help support innovators who start those companies and those who work at our portfolio companies by funding them, advising them, and amplifying their work.
