24/10/2022

Dr. Ewan Kirk on The Do One Better Podcast – “Uncertainty is Good’

Our founder, Dr. Ewan Kirk, recently appeared on the Do One Better Podcast hosted by Alberto Lidji. He discusses why uncertainty is good in philanthropy, how we can harness failure to better our ideas, and why philanthropy is the place to take the biggest risks.

Ewan shares the huge success of SolarAid and how it has exemplified everything the Turner Kirk Trust stands for. He also argues the point that projects should aim for policy change as their final outcome rather than simply helping the largest number of people possible.

The Do One Better Podcast hosts conversations with philanthropists, business leaders, and public figures who are driving forward the global sustainability agenda and pushing for positive change in the world. It is led by Alberto Lidji, the ex-CEO of the Novak Djokovic Foundation and a Visiting Fellow at the University of Cambridge’s Judge Business School.

Transcript

Alberto Lidji: Hello and welcome to the Do One Better Podcast in philanthropy, sustainability, and social entrepreneurship. I'm your host, Alberto Lidji from London.

Today it is an absolute pleasure to welcome onto the show philanthropist Ewan Kirk, who is the co-founder of the Turner Kirk Trust. He's a former partner at Goldman Sachs and we'll hear his views on philanthropy and risk taking and indeed giving grantees permission to fail. And we'll also see what this looks like in practice by delving into a case study of the work they've done with SolarAid.

So without further ado, Ewan, a big heartfelt welcome onto the Do One Better podcast today.

Ewan Kirk: Good to talk to you all about it. I’m looking forward to it.

AL: Excellent, excellent. So tell me, you're a philanthropist. You're someone who has a good grasp of numbers as well, very involved in the business community, philanthropy, and you're a co-founder of the Turner Kirk Trust. Why don't we kick off by finding out a little bit about that. What is the trust all about?

EK: Well, you know, you sort of encompassed a lot of things. I was a partner of Goldman Sachs, I ran my own hedge fund. And when you're doing that, as you might imagine, Alberto, you're a bit busy. So, what tends to happen with philanthropy is it's a kind of fire-and-forget thing. So if somebody says, “Hey, you know, would you like to give money to X?” And you go, “Yeah, sure, here you go. Here's the money. Never speak to me again.” Right? And it all gets very unstructured, and you don't really think about it very much.

And look, you're still doing good. You know, you might be donating to good projects, but it's not a very structured thing. So, after I sold my firm and I had a bit more time, my wife and I set up a trust to actually manage the process better. I mean, it's a little bit like putting guide rails around about yourself.

So what we decided was that we would pick the areas that we had either passion about, but probably more importantly had some domain-specific knowledge, which helps, right? When one is thinking about philanthropy, it's important to at least know a little bit about what it is that you're supporting. I mean, that sounds a bit sort of philanthropy 101, but I think it really does.

So, you know one of the things that I have spent a lot of my time involved in is the world of STEM – science, technology, engineering, mathematics. You know, I am a massive geek. I'm a mathematician, I'm a programmer. I still program every day because it keeps my mind active. It's a lot better than doing crosswords.

And my wife's very much into conservation and early child development. So we picked those areas as areas that we would focus on. Now, there's some good reasons for that – we have domain-specific knowledge – there's also some organisational reasons. When you run a trust, you get a lot of people asking you money.

And that is, of course, fair enough. But in a sense, it makes it easier to say no if it's something that is outside the domains that the trust works in, it's a very easy thing to say no, rather than having to really agonise about it. One of the things that we don't do is medical research, just because there's a lot of money going into medical research. It doesn't really need our money.

Or maybe it does, but other things need money too. I remember being approached by somebody who was wanting to raise money for a local hospital. I won't go into details but raise money for a local hospital to do with, you know, heart surgery or something. And I remember saying to him, “You've got such an easy pitch,” right?

You're broadly pitching to middle aged men with money who are probably gonna have a heart attack in the next 10 years and are definitely up for supporting that kind of thing. Raising money or trying to do philanthropy in the mathematical space, it's a lot harder to do that. So, we put the trust together to do that.

And the other thing, and I'm sure we'll come onto this later, is it gives us an opportunity to scale what we do appropriately to the resources of the trust. You know, sadly, I'm not Bill Gates and we are not the Bill Gates Foundation, so we don't really have the opportunity to attempt to develop a vaccine for malaria for example, because that's kind of expensive.

AL: And so, there's the trust that you have and there's these domain areas. You mentioned STEM, conservation, early childhood development, and you have, as you mentioned, you were a partner at Goldman's. You're good with numbers, you like to code every day.

And also you're a tech entrepreneur and entrepreneur by definition, you know, so I imagine you have a healthy appetite for sensible risk taking. And the folks at Goldman, they're actually very well known for their risk management. How do you combine that with the world of philanthropy? I know that that's one of the areas that you look at, right? Making sure that philanthropy and risk- what's the interaction between those two?

EK: Well, I think that philanthropy in general – and of course one has to be very careful generalising across a massive field – but in general, philanthropy is more risk averse than it should be. So, what one finds is you take a donor, a charity goes to a donor and says, “We want to do this,” – I don't know, a good example is drill a hundred wells for villages in Africa.

And the donor says, “That's a great idea. Here's some money. Go and drill a hundred wells in Africa.” And the charity is sort of on the hook to do that. The donor has said, “Do this.” The charity wants to go back to the donor and say, “We did this. You have had impact.” Probably to get more money out of the donor.

That’s a typical way of doing things. And actually, when you wind it back, charitable money, philanthropic donations, should have the highest risk tolerance, right? You should be willing to take a risk with philanthropic money. So, one of the things that guides our philanthropy in the trust is this concept of permission to fail.

So, donate money, give money, fund projects, but fund those projects – not just the projects that have some significant risk of failure, but also encourage people to take those risks. Because every philanthropic project has some risk of failure. Obviously, nothing is certain in this world, but sometimes it takes the donor, the philanthropist to say to the charity, “Go and do this, it's okay if you fail. It's okay to experiment.” And that, for me anyway, comes from the STEM background. Science and technology and engineering and mathematics are all driven by experiments. And almost by definition, most experiments don't give you a result. Well, they give you a result, but it might not be the one that you want. Research is not an easy thing to do.

AL: But even from the failure, you learn something. You know that that one doesn't work.

EK: You always learn more from failure. One thing I would like to do if I was king of the world is I would stop people who are successful writing business books that you buy in airports, you know, those books about Steve Jobs or [unintelligible] or whoever these people are who have been incredibly successful. I think people who have failed should write business books and tell people how they’ve failed and why’ve they failed, and why they wouldn't do it in the same way again. And because I spend a lot of time in the venture space, particularly here in Cambridge, most early-stage companies fail.

That's just the way of it. Now, venture is very good at understanding that, it's the ‘we're going to invest in a hundred firms and 50 of them will fail and 30 of them will be okay and two will be fantastic’. I think that kind of approach in philanthropy, that ability to invest in something and give people the space to experiment without feeling that failure, is a stigma.

I think that's a very important thing in philanthropy.

AL: So what got you into the world of philanthropy? I mean, at what point did you say, “Look, I'm leaving the corporate space,” or maybe keeping it on the side or not entirely leaving it, but at what point did you say, “Look, here's philanthropy. This is what it is, or this is what I think it is. I wanna find out more.” So, I'd love to learn a little bit about your journey.

EK: It's a hard question. It's not like, you know, one day I just woke up and thought, “Aha, right. I will now get much more deeply involved in philanthropy!” It's definitely not like that.

And philanthropy itself can take many forms. I mean, one of the things that I do is I spend a lot of time with early-stage companies or early-stage investment funds, or people who are coming out of university and don't know what to do. I spend a lot of time with people giving them the benefit or maybe the dubious benefit of my experience because a lot of people did that for me.

You know, a lot of people were helping. If you help your friends or acquaintances to get over problems, deciding new careers, business ideas, if you give them advice on that, that's just a form of philanthropy too. It's not giving a hundred thousand dollars to something, but it's still a form of philanthropy.

And so, I think where it became much more serious, I guess, is actually having the time to do it. That's one of the important things is to be able to focus more on it. And it shouldn't be a job, but it's definitely not a hobby. And it's on that spectrum from a full-time job to a full-time hobby.

There's something in the middle there. And once I started having more time, I think that was really when it started to get serious in that way. Having been quite lucky in my career – I mean, I have been lucky, a lot of success is about being in the right place at the right time, and in my career, I had been in the right place at the right time. There was also the moment where I realised that we had enough resources to be able to put our shoulder to some significant wheels. That's the other thing that changes at some point in your life where you realise, ‘hey, I can actually affect change’ or at least let people do experiments as we discussed earlier.

Now that does, of course, require philanthropists to understand the scale of their own resources and match their ambitions to their own resources. So, one of the things that is important is to realise, what are the types of problems that you can solve? Now, let's pick an example.

World Hunger. Well, I can't solve world hunger. I don't have enough resources, money to be able to do that. To be perfectly honest, philanthropy can't solve world hunger because the total philanthropic resources in the entire world is about $2 trillion. That isn't enough to solve world hunger. If you just gave all of that money to everybody in the world or to the bottom billion, let's say, they would have $2,000 and that would be great, but then that would run out and then where do you go from there?

So, there are problems which are absolutely government sized. You know, solving how we educate children, how we deal with healthcare crises, or just healthcare in general. All of these things are pretty much government sized. So, my belief is that since I'm not the size of a government, then what we can do is help to catalyse change. Do those experiments to say, “Hey, if you did this, here's a really cheap solution. We have gone and tested this cheap solution to something.” Doesn't matter what it is, lighting a village in Africa or teaching children to be better at doing mathematics. “We've road tested this. Here's the evidence. It works for a hundred villages in Africa, or it works for a thousand school kids in the UK. Now, government, take this and just scale it up.”

That is what I think philanthropy should be doing.

AL: And where you see your philanthropy making most of a difference.

EK: Hopefully. And I suppose the third thing is that there is a lot of certainty in philanthropy. A lot of misplaced certainty. ‘We will do this, we will do that.’ And if there's one thing that being a scientist teaches you, it's to be uncertain. ‘I don't know’. This is my view, and I could absolutely be wrong.

AL: I think the world needs more people who are happy with the words ‘I don't know’. Isn't that the case?

EK: ‘I don’t know’. Isn’t that great?

AL: It’s very rare that people are just happy with that, right? We need more people to say, “I don't know.”

EK: Yeah! I sometimes dream of the fact that a politician will be on the evening news and the interviewer will say, “Well, what are you gonna do about this?”

And the politician just says, “I don't know. I've got no idea. We’re gonna go and try these three things and see whether or not they work and maybe they’ll all fail, but if one of them works that would be great.”

AL: Absolutely.

EK: Because that's what the real world is like. Although the general public, or in general, people live in an uncertain world, and everything that comes into your world is uncertain.

Whether or not it's ‘what am I gonna have for dinner tonight’, or ‘am I gonna lose my job tomorrow?’ or ‘are my mortgages going to go up?’ Any of those things is incredibly uncertain in people's lives. Policy makers basically sell certainty. ‘If only we did this, then something would happen,’ whatever it is. So generally it's about economic growth. ‘All we need to do is push this lever, and if we push this lever that says anything from tax cuts to greater government spending, it doesn't matter what it is. If we push this lever, then everything will be great, trust me. That's what I'm saying.’

Now that's wrong. People should say more often ‘we don't know what the answer to this is, but we're gonna try a few things.’

AL: Yeah. So what you do know is that you would like to see philanthropic resources being embraced as sort of risk capital, right?

EK: Absolutely.

AL: And this is obviously not an invitation to fail, but this tolerance and recognition that there's value in failure and encouraging people to take risks, sensible risks.

But how do you go about that, and let me phrase the question by giving you a couple of options. Perhaps one of these two is correct. Is it the fact that you simply grant out some funds and then the grantee comes back to you and says, “Um, this is what's happened,” and they feel comfortable in telling you that they've succeeded or you make them feel comfortable if they need to tell you that they've failed.

Or is it the case where you say, “Look, I know that this is what you want to do,” when you're speaking to the grantee, “but let's go for a riskier thing. Let's be a little bit more ambitious.” In other words, putting that failure possibility in front of them when they themselves maybe hadn't thought about it.

EK: It's very much the second rather than the first. So, whenever you go to a grantee or a place where you are meeting lots of people who wish to be grantees, a university's a good example. You know, you go to university, you meet a bunch of people, and I always ask the question to try and prime this which is, “What is the experiment you would do, but you just can't get funding for it because it's too risky?”

I don't mean reputationally risky or that kind of thing. It's just something that you can't get funding for, or even you don't want to apply for funding for because there's a big chance that you just end up with a null result. Tell me about that. Tell me how that works and what that thing is and that opens the door.

Because very often what people really want to say is, you know, you speak to the grantee, what they say is, “If you give us X, we are gonna do Y and it's going to have this impact and this is going to be the most fabulous thing and we're guaranteed to succeed on this because therefore your philanthropic pounds or dollars are going to have the biggest impact by doing that.”

And I want to hear about. That bit's interesting, but I kind of want to hear about the stuff that's hard to get funded. The things that are just, you said take sensible risks. Actually no, take crazy risks!

AL: Alright! I mean, careful what you ask for you’re gonna get a lot of people ringing you up!

EK: Well, maybe not crazy risks and certainly don't steal the money or spend it on a fast car or whatever. But people should be able to do that. That should be part of what philanthropy funds. As you say, it should be risk capital. If I take a dollar and I invest it in a public stock or a bond, then I'm pretty certain I'm going to get my money back.

Very rarely do companies go bankrupt, or public companies anyway. And very rarely do governments default on their bits. I'm sort of guaranteed-ish to get my money back, plus maybe some interest payments or maybe the stock will go up. So, there's some risk embedded in that, but we've got a really good idea roughly what that is.

Philanthropic money. When you give it to a project, it is literally gone. Right? Your rate of return is zero. Apart from maybe the impact and so on. But financially it's that. So, it should be incredibly high risk. You should be willing to take incredible risks with that capital, but somehow we've got to the situation that that doesn't happen.

AL: Hmm. And so on that point, if I'm following on from the line of questioning as it were, if you're speaking to a potential grantee, you'd like to ask them a little bit about what is it that could be riskier? What is it that they could do and take that line of exploration. I gather from that then that perhaps you are not necessarily accepting or encouraging funding applications, but you're actively going out and seeking and in an exploratory manner, seeking out these opportunities, these pipelines of things to fund.

However, if you were inviting applications for funding or your advice for those who do indeed solicit funding applications, what should they be doing? Should they be putting in those descriptions of what the application should include? Should they be inviting people actively to express their risk appetite, and in that funding application say this is why what we're doing is actually risk loving.

EK: I think so. At the very least, some uncertainty in the application would be good as we talked about earlier. Uncertainty's good. And although we generally go out and find projects that we are interested in, of course some projects come in through the door, but often they're not really exactly in our space. Which is sad, but it's not something… you know, I want to focus on the things that I feel I have some knowledge about.

So, I like it when people are uncertain and I like it when they express the level of risk which is involved in their projects where they can say, “We're going to do this and this. This might not work, but if it does, then it has this outcome.”

So, impact is not just about the number of people affected. Very often in philanthropy, people will say, “If you give X, then this number of people will get malaria nets or will be vaccinated against something or will get food.” And these things are really critically important but, for me anyway, what I want to know is that there's some underlying process which could then be scaled up.

You know, back to our previous point about government-size spending, I want to know that if we do this, then what comes out of this is not a hundred villages in Africa with wells – which is a good thing in and of itself, I'm not disagree with that – but what comes out of that is a process where the government of the country can drill wells for everybody.

So that's the thing that I want to know. Generally, that's a technology thing. We have a new technology for drilling wells in villages, which is a quarter of the cost and better for some reason – I’m making all of these things up, Alberto! But you can imagine, right? If somebody came to me and said, “We've got way of drilling wells in Africa that is a quarter of the price that it normally is, and it's much, much easier to do and local people can do it and it generates employment and we'd like to go and try it in Malawi,” for example. Then I'd go, “Sure. Great. That sounds like a fantastic idea. What's your plan for going to see the Malawian government after you succeed?”

“Oh, wait, we hadn't thought about that.” No, no. Think about that. That's the real impact is doing that. So often, although not exclusively, these things are- these types of projects are about doing something which can affect policy. Or at least influence policy. And there are lots of ways of influencing policy.

The bad way of influencing policy is taking congressmen out for dinner and getting them drunk, right? That's a bad way of influencing policy. Nobody should influence policy that way. But influencing policy by generating evidence that something may be a good thing to do. Look at all of these- I'm hedging everything around maybe- evidence based policy is all very well, but you've got to choose your evidence and sometimes people choose the wrong evidence.

However, just setting that to one side. If you can have evidence that something is good, then you can change a policy and then that gives you- that's the catalyst for big change and ultimately what philanthropists want to do is to affect big change.

Socially good change, I think, is generally the case. In general, I think the philanthropic community's heart is in the right place. They want to do good. Almost exclusively. I don't think I could ever, or I would ever say that I have spent time with a philanthropist who wants to do bad things.

But you have to have a process to do that as broadly as possible. And for us, given the size of the trust and the sorts of resources that we can put behind things, it is about doing relatively small-scale experimental projects with a high risk of failure that in principle could influence policy.

AL: Is there a particular instance that you can think of where you've encouraged a grantee to take risk and actually it's worked out quite nicely, or maybe not, I don't know.

But give us a little bit of insight into one case.

EK: Okay. So, I'll give you one success case, which is the exemplar of our success cases. A charity called SolarAid had the ability to get solar lights delivered into Africa relatively cheaply. Obviously manufactured probably in China and for some very small amount of money.

You’ve got a solar cell, a small battery, a nice LED light, and a USB port to charge a mobile phone. These things are very useful, fantastically useful. But the problem, is how do you distribute them? Because there's a lot of models here. You could sell them, you could donate them, you could just say, “Hey, we've got a million lights, here, have a free light.”

You could do things by hire purchase. I mean, they were quite cheap. But they’re still a significant proportion of somebody's daily or weekly wage. You could do it through schools, you could do it on a pair of use basis. I mean, there's lots of models here and they didn't really know how to do that.

So we said to them, “Here's a grant. Go and pick five villages and do it differently in five villages. However you want to do it, I don't care. And also, I don't care if none of them work. Because you will have learned something that these five ways of distributing solar lights in Africa are not very good ways of doing it. Go and find another one.”

And that was almost for us the point at which we decided that permission to fail was a good way of operating. Because it worked really well. And I think it turned out that distributing them on a sort of hire purchase agreement via schools was the best way of doing it because of course, if you've got light, then you can do your homework at home.

AL: And it wasn't up to you. You didn't say, “Look guys, these are the five different things I want you to test out.” You let the grantee figure out what their conjecture is about what could work and letting them go and run it.

EK: That is actually another thing that you have to be very good at doing despite having some domain-specific knowledge in, in this case, a technology thing. You as a philanthropist, you do have to step back. The people who are doing the projects are the experts. You're not an expert. If you were an expert, you'd be doing the project. So you have to trust the people that you work with, the grantees, that they know what they're doing and they're doing the best thing. You just have to give them a bit of space to try other things.

So that works incredibly well. As of yet, we haven't really had a failure on that yet.

AL: And regarding the SolarAid grant or support and these five different variations that they were testing out. You mentioned they identified one that was a thumbs up.

The other four, were some of them also viable options, perhaps not as attractive, but also good, or were some of them outright, “No, let's not, we're not gonna go with this?”

EK: As far as I remember I think two of them were definitely completely unviable and a couple of them were marginal and one of them was better. Of course, we know there's no best way here. There's just better ways, and one of them was better than the other ones.

And so that is a good way to choose. Right? What’s the phrase… ‘don't let perfection be the enemy of good’. Well, sometimes you need to really focus on that as well.

AL: Yeah, absolutely. All very interesting. The key takeaway that you'd love for the audience to keep after they finish listening to today's episode. What might that be?

EK: I wish I had a pithy phrase, just ready to go. I guess what I would ask the audience to do is to think about their own philanthropy and think about how they support, or at least embrace failure, not support failure. You definitely don't want to give money to charities which are just going to fail. That's a very bad reading of permission to fail. Permission to fail is about picking good projects but allowing them to experiment. Philanthropy, or maybe philanthropists, should embrace experimentation a little bit more. I think that would be great.

AL: Excellent. Thank you so very much for joining us on the Do One Better podcast, for giving us insight into your thinking about philanthropy, for giving us a case study and showcasing how you go about your philanthropy. It's all incredibly useful, not just for me as a learning exercise, but also for the folks who are listening.

So I appreciate your time in joining us today.

EK: It's been a real pleasure, Alberto. Thank you very much.