Photo & Editing by KK Ottesen
Howard Fischer is a co-founder and the Chief Evangelist at Gratitude Railroad, a community-driven impact investment firm, where he serves on its Board of Stewards. He was the founder and former Chief Executive Officer of Basso Capital, L.P., a hedge fund management company. Fischer serves on the boards of 1% For The Planet, The Carbon Underground, and Garrison Institute’s Compassionate Leaders in Finance program. He is an investor with Terra Alpha.
*Terra Alpha’s CIO, Tim Dunn, is a Limited Partner in one of Gratitude Railroad’s funds.
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Can you talk about and the path that led you from your initial hedge fund work to the impact investing you do now?
It’s complicated, that’s for sure. I was in the hedge business for almost 40 years. I exited in December of 2022. But my hedge fund business was growing extremely rapidly in the wonderful financial climate of 2006, 2007, into 2008. September of 2008, my firm was the biggest it had ever been. We had $3 billion of assets under management, 75 employees, an office in Hong Kong, in London, and in Stamford, Connecticut. Then Lehman failed. And the firm had significant financial losses for its clients. I had significant personal financial losses. Over the course of the ensuing months, I had to lay off 55 of the 75 employees. Which was tough and sad and tearful, in many cases.
I spent some time trying to figure out how I might resurrect the firm. The economic opportunity for the businesses in which we specialized was extraordinary. But investors weren’t willing. And that led to a period for me of depression, confusion, uncertainty. What’s life about? At some point during that period, I read about a program at Harvard University called the Advanced Leadership Initiative and applied, not certain that I wanted to go, and confident that Harvard wouldn’t accept me because they never did before. Somehow, I got in, and it was the most incredible learning, growing, and transformative experience of my life. I took well over 20 classes over three semesters – only two in the business school – really looking to explore and blow my mind. Classes in the Divinity School, the Graduate School of Design, the Law School, and the Kennedy School. And just learned and met an amazing group of people, many of whom became close friends.
The goal of the program is to figure out: What can you do for the rest of your life – your next act, your third act, your second act – that serves humanity better than maybe you did? Most of us were lawyers, doctors, businesspeople, investors, things like that. With another fellow in the program named Eric Jacobsen, we began to explore this thing called “impact investing.” And that led to the creation of Gratitude Railroad and the work we do now.
Do you remember how you initially learned about impact investing?
It was actually Eric who found it. One of the professors he met was Michael Porter. Michael’s core theme is that there are three pools of the capital in the world: the philanthropic pool, the government pool, and the commercial pool. The commercial pool is by far the largest. The philanthropic pool is the smallest from a change or social justice/environmental point of view since 80 to 90 percent of all philanthropic capital goes to hospitals and healthcare institutions, educational and religious institutions. Government can be a great but unreliable partner, subject to corruption and manipulation. And, it changes. Like here we are seeing all the good work in the environment and social justice Biden made being erased.
[Eric and I] knew business, and also knew that we need trillions of dollars to solve even the sub-problems within climate, whether transportation, energy, food, circularity of consumer goods, etc. We need trillions to solve the social justice issues. And the only way to get the trillions of dollars is creating good business opportunities, sustainable business opportunities, that provide what we’ll call market-rate returns for the investors. In discovering this thing called impact investing, we began to see a lot of smart, passionate, well-intentioned people who were hampered by one material thing: their inability to move capital.
So we thought we could start with our own skill set as investors – we both had been successful investors – and our own capital. And make decisions on how to invest in businesses that would make the world a better place. To bring a Wall Street attitude to impact investing, to identify serious founders authentically engaged in the mission, who also had the ability to grow a business that would eventually become profitable and scalable.
So that is what you’re doing with Gratitude Railroad.
Correct. In 2013, Eric and I convened about 15 or 20 people at what became the first of our now-annual investor gatherings. We gathered a bunch of people like us, basically, talented, successful, wealthy businesspeople, to share some of the things that we were thinking about. We had some early-stage companies present, some fund managers, some thought leaders in the industry, in almost an angel-network kind of way, where you didn’t have a formal structure; people did it independently, but together.
It’s become increasingly structured and professional. Today, we have six full-time employees at Gratitude Railroad. We operate three funds of our own. And we have at least 150 people who have invested with us in one way or another, directly or through our funds. We have had various kinds of meetings and convenings, online and in person, that have touched many, many thousands of people. If you think about all the businesses that we’ve touched and started, we’ve directly moved over $600, $700 million. And, through the work that we’ve done by teaching people about impact investing, we’ve influenced billions more to move to other entities that support people’s work in impact investing.
Ultimately, the goal is to make the word “impact” unnecessary. That people think about the impact of their investments as part and parcel of them. In my mind, it’s so clear that when you run a business that’s polluting the commons because it’s not charged for that, you’re cheating. As a businessman before this transformation, that’s what I would do too. Like, okay, well, if I can get that for free, I’m going to take it.
It’s a big shift from your earlier work. Can you talk a little more about how trauma from the 2008 financial crisis transformed you and redirected your focus?
Yeah, I appreciate that. I gave a presentation to an MIT Sloan alumni group a few years ago, and entitled it, “From Gordon Gekko to the Dalai Lama.” If I write a memoir, I would use that as a title. When I started in the hedge fund business, all I cared about was getting rich. There was no thinking about the implications of my investments. I didn’t do anything illegal, immoral, or unethical. But simply I used my skill set and my experience to make as much money as I could for myself and my clients.
I’m still trying to do that, but consciously, with thoughtfulness, and excluding enterprises that do harm to society or to the planet. So that’s the shift, really, and it happened in waves. As I lost half my wealth and the world was in a very difficult place after the early stages of the financial crisis in 2008, I felt disconnected. And I began to study a bit of Buddhism, reading books like The Monk Who Sold His Ferrari, The Jew in the Lotus. But the spiritual part of my life began to deepen at Harvard and in the years since then. Having that wealth and the potential of significantly more wealth if the crisis hadn’t happened, having that taken away from me, and thinking that would all go away, was what really woke me up, helped me to understand that it’s nice to have things. It’s certainly nice not to worry about money and buy the things that you want. But there’s this omnipresent question, and it’s a conversation we have a lot at Gratitude Railroad: How much is enough?
I still love making money. It’s a really wonderful thing to have a decision made, to have it be successful, and get rewarded for it, economically. But, there’s a special satisfaction that comes from not making money just for money’s sake. But investing in a way that has benefits for society and/or the planet. I was talking about it with a friend the other day who was a partner at Goldman Sachs. All his peers who continue to work to make hundreds of millions of dollars more, that’s their life. And I feel like that’s so empty and so sad. These people have so much ability to do so much more, and all they want to do is have a bigger house, a bigger jet, more paintings in some cases – whatever.
So if you were to go back with your current thinking and talk to your former self, would you be able to get through to former yourself?
That’s a very interesting question. I do think about it: Could I have convinced Howard Fischer, who grew up in very, very modest means just wanting to get rich, to have the things that wealth meant, that this path would have been better? I don’t know if I could have been convinced. Spiritually, I believe the journey is the journey. And the learnings and the experience I had in the hedge fund business enabled me to be here. I am actually grateful for the financial crisis. Because, without the financial crisis, I would have been, you know, one of those extraordinarily wealthy hedge fund managers that you see hanging around Trump today. I may have had more things, but I can’t imagine that I would have been as fulfilled and as happy.
What would you like to see happen with Gratitude Railroad?
Instead of 150 people who have moved $700 million with us, I want to have 1,500 who have moved $7 billion. They don’t have to necessarily move it with us, but I want them to open up their eyes and make that capital do more than just a return. I believe this is the right way to invest. It’s economically rewarding, and it supports a better, healthier, happier, cleaner, more sustainable planet and society.
There’s a phrase I use, and I call it “free the money.” You know, why put your CDs in Goldman Sachs? At least put your federally insured CDs, until Trump changes it, at Climate First Bank? Put a CD at Amalgamated Bank, which is the biggest B Corp impact bank. There’s an insurance company I’m invested in called Blue Stone Life. They’re a B Corp. They’re a 1% for the Planet. All of the reserve funds are invested in a climate-positive way. So people need to free the money and get outside that mindset of, I can’t do this, it’s too risky. Why is it too risky? I think people are just so afraid, and they shouldn’t be. We’re happy to be the first investor in. We’re willing to make a bet, to rely on our own experience and intelligence, to identify fund managers and founders who may not fall within the comfort zone of Goldman Sachs, but we know are doing a good thing. And there are certainly people who have the wealth to be more flexible with how they invest. Instead of saying, I need to invest in a fund that has a five-year track record or a 10-year track record, take a chance, right? Vote your values.
In all the conversations you have with investors, are you finding that mindset taking hold?
Very much so. When Trump got elected in November, and everybody was already beginning to be disappointed and concerned, my call to action became: This is our time. We’ve been explaining for years why philanthropy is not going to make the change that we want and why government isn’t the partner we need. And how capital is the only thing we really can deploy in a way that serves our values. I got a call on Monday from a friend of mine who is a very generous philanthropist and very active political donor who has touched the Gratitude Railroad world in a small way, who said, “I’m ready,” you know, “now’s the time.”
And I’m hearing that conversation more and more. This is the only thing we can do. We all knocked on doors. We all wrote checks. And look at the outcome. But this is the world we live in. So let’s build those businesses that make the world a better place.
What has been most exciting for you recently?
I love being with people who are pondering questions. That always excites me, motivates me, to just explore ideas. And how do we use them to make the world a better place? And that also comes from the books. So, you know, reading Rutger Bregman’s Moral Ambition. Also Michael Lewis’ book about Sam Bankman-Fried, Going Infinite. And I love the businesses we invest in. We recently launched a business to help fund community solar projects. To bring solar energy in an affordable way in a collective manner that’s good for the environment – sort of a climate-to-the-people business. We’re providing electricity at a cheaper price. Everybody wins. The environment wins. The consumers win. And taking advantage of tax structures, it provides a very attractive rate of return.
The way I see the world, the spiritual practice that I live by, the adverse actions that Trump and his crew, his gang, are taking, speak to opportunity. And they will turn more and more people to recognize how important it is to utilize your capital in a manner that matches your values.