Capital Series: Steve Simon, Simon Equity Partners
This episode is part of our Capital Series hosted by MCJ partner, Jason Jacobs. This series explores a diverse range of capital sources and the individuals who drive them. From family offices and institutional LPs to private equity, government funding, and more, we take a deep dive into the world of capital and its critical role in driving innovation and progress.
Steve Simon is the founder of Simon Equity Partners and owner of the Indiana Pacers.
Steve is not the ordinary guest you'd expect on a climate podcast. Beyond his professional pursuits, he has become more involved in climate-related matters behind the scenes for quite some time. This involvement spans various domains, including investment, advisory roles, and philanthropy.
In this episode, Jason and Steve have a great discussion about Steve's journey to caring about climate, how he got started, how his thinking and activities have evolved, and where he'd like to see them go directionally, both for him and his family generationally.
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Steve Simon Twitter / LinkedIn
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*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on July 13, 2023 (Published on August 9, 2023)
In this episode, we cover:
[03:52]: Steve's real estate roots and early investments in retail and conscious consumer brands
[06:43]: Transitioning from a traditional family office approach to impact investing with aligned values and returns
[08:21]: Family office structures and how generational dynamics influence investment decisions
[12:16]: Steve's early awareness of climate change and his involvement in conscious consumerism
[15:02]: Flexibility in investment flavors, ranging from returns-focused to impact-driven investments
[17:19]: Opportunistic climate investing across various sectors, focusing on regenerative ag, waste, electrification
[18:51]: Optimizing learning, accountability, and data-driven impact assessment in investments
[20:34]: The iterative process of investments driving learning, and learning influencing investments
[24:23]: Leveraging family assets and competencies for positive impact on investments
[24:49]: How insights from Pacers Sports & Entertainment ownership inform impact strategies
[25:31]: Mentorships and partnerships (Scott Jacobs at Generate, Nat Simons the Energy Foundation)
[27:35]: Merging policy advocacy with investments for impactful outcomes, focusing on regenerative ag opportunities in Indiana
[28:26]: Balancing short-term self-interest (sports and entertainment) with planetary well-being
[33:16]: Dealing with generational guilt and maintaining a positive mindset amid climate anxiety
[39:26]: Exciting opportunities in Indiana: wind/solar growth, coal retirement, ag reinvention
[41:13]: Why Steve became a MCJ Collective LP
[45:26]: What Steve hopes to accomplish in the next 10 years
[46:25]: Who Steve wants to hear from
[47:13]: Steve’s call to action for other family offices
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Jason Jacobs (00:00):
Today on the MCJ Capital Series, our guest is Steve Simon, founder of Simon Equity Partners and owner of the Indiana Pacers. I was excited for this one because Steve is not your typical guest on a climate podcast, but in addition to his professional pursuits, which are in other areas behind the scenes, he's been getting more active in climate for quite a while from an investing standpoint, from an advising standpoint, and as a philanthropist. We have a great discussion in this episode about Steve's journey to caring about climate, how he got started, how his thinking and activities have evolved over time, and where he'd like to see them go directionally, both for him and for his family generationally. But before we start-
Cody Simms (00:45):
I'm Cody Simms.
Yin Lu (00:46):
I'm Yin Lu.
Jason Jacobs (00:48):
... and I'm Jason Jacobs. Welcome to My Climate Journey.
Yin Lu (00:54):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:59):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (01:10):
And with that, Steve Simon. Welcome to the show.
Steve Simon (01:16):
Pleasure to be here, Jason. Yeah, good to see you.
Jason Jacobs (01:18):
I'm psyched to have you. It's funny because I was just this random guy who started learning about climate change and then somehow evolved into being a public journey, which was not the initial intent. But then random people just started showing up in my inbox and one of them was, I think it was Josh Felser who got in touch and said, "Hey, do you want to meet the owner of the Pacers?" And I'm like, "Do I want to meet the owner of the Pacers?" It's like, "Of course I want to meet the owner of the Pacers, but why does he want to meet me?"
(01:43):
It turns out, I think at the time that you were a show listener of our little podcast, which is amazing, but also really interesting because one wouldn't necessarily think that the owner of the Pacers would care about climate change and seek out these little nichey kind of wonky shows like this one. But it's so awesome that you are heading down this path with knowledge and also starting to deploy capital in the space. I just wanted to bring you on to learn more about that journey, where you are on the journey, how you got here, and maybe there's some lessons that could inspire others to get off the sidelines as well.
Steve Simon (02:15):
I appreciate it. Yeah. What you've created with MCJ has been hugely inspirational to me. I think that's our job to admit our frailties, to continue to get smarter people around us to learn and grow. But your humility of your journey on MCJ has been a real inspiration. We've been trying to be intentional with our capital and our platforms and our relationships to make a difference. We're continuing to evolve, and our job is to not take ourselves too seriously, to admit our faults, and to continue to find great partners to help continue to educate us and inspire us, and put capital to work and pair that with our philanthropic capital, which we think that's a real connective glue to have those pools of capital. And also where we have influence, where we have relationships, to start to play with confidence around policy and advocacy and really connect the thread up. It's not all climate, but climate's such a huge one for what we do. But we're continuing to try to get better and get thoughtful and learn.
Jason Jacobs (03:17):
Well, we're going to get into it, but before we do, I just want to return the compliment and say that I think that's one thing I've also appreciated about you is that, got some fancy titles on your resume. You would never know it by spending time with you, just like a humble regular guy, and a lot of people in your shoes aren't that way. That's just really refreshing. I've really enjoyed getting to know you, and appreciate how you carry yourself in the world.
Steve Simon (03:38):
By the way, I had someone who was going to dangle grapes in my mouth, but I put them off camera.
Jason Jacobs (03:43):
But now we know they're there. So even though we can't see them, we can use our imagination. But before we get too far down the path, Steve, I'm just going to ask a nice open-ended question to get things going. Talk a bit about your origin story and your professional pursuits, and when this caring about climate change first manifested and how those ultimately started overlapping.
Steve Simon (04:04):
My cousin David Simon used to call me a tree hugger. You're labeled a tree hugger for a long time.
Jason Jacobs (04:10):
The press does, too. I was reading about you before this discussion.
Steve Simon (04:13):
Oh, really?
Jason Jacobs (04:14):
Yeah. Grateful Dead listening, tree hugging, almost sappy. I think the media called you sappy a few times.
Steve Simon (04:20):
I've had a lot of intention and been around some great causes and been doing stuff around the environment for a long time, but it's probably not a typical journey for someone who's becoming more awake and conscious and thoughtful and intentional. But in the past, long ago we'd put capital to work and try to make returns and then put that money in a foundation and try to give that away and that was sort of the limited model long ago. And then some of the journey was starting because I came from retail and merchant, brick and mortar retail and brand sort of history both as an investor and certainly being around the built environment with Simon Property Groups. So that was my original career and being around and starting to back brands more traditional brick and mortar retail brands.
(05:08):
My first, not awakening, but opportunity to put capital to work, there's not really a name for it, we used to call it conscious consumer, but in the early, it must have been 2000, in 2000 I backed Adam Lowry and Eric Ryan, a little tiny company. They used to make the product under their cupboard, but it was called Method. And that journey of seeing how to invest in a business and at least more thoughtfully bring product or service to the customer, that way it was like high design but environmentally friendly, non-toxic cleaners.
(05:45):
But that first opportunity, because we were always putting capital to work, that really started the journey of, "Wow, I can put capital to work and try to be helpful and bring product to market that is better for you from health or wellness or carbon intensity standpoint." I mean, that was really the first investment capital that was more thoughtful. We've been around a lot of great brands helping them grow long before we were putting capital to work with more professional partners or in businesses that were doing more climate centric stuff. That was the original journey of like, "Wow, we can grow and learn and invest with people we're rooting for, and also who are doing good things that deserve to be brought to market." And it's evolved from there certainly.
Jason Jacobs (06:31):
If I read right, you grew up in the family business more on the real estate side, and then at a certain point branched out and started looking more holistically across the business world and following your interests. Is that how it went?
Steve Simon (06:43):
Yeah, it's been a migration. But yeah, I left that commercial real estate business long, long ago. We started running a private real estate holding company that had real estate and still does, but also had pools of capital. So started to invest individually or as a family, and started to invest a long time ago. And didn't wear that hat of real estate development or big box leasing, that original career I had. I have not done for 25 years or so.
Jason Jacobs (07:11):
It sounds like typically the way things have been done in the family office world is to make money, and then use that money for philanthropy, and that philanthropy is the way to give back. But the job on the investment side is primarily, or maybe even exclusively, to produce returns. If I'm hearing right, that's the path that your family had initially started down, and at a certain point you realized that there was a better way.
Steve Simon (07:38):
Yeah, a better way, and that realization we're not a hundred percent impact, but we're moving there. And we can do philanthropically or with low interest debt some concessionary investing and return or preservation of capital. But the idea that we can put our capital to work and it be totally aligned with what gets us out of bed in the morning and what we're passionate about, and not have trade off of returns, like that journey of that opportunity to pair that stuff and not feel like you're not fulfilling your fiduciary responsibility to make risk adjusted returns for yourself or for your family or in some cases we've done that for others, like that whole evolution has been exciting to watch and participate in. You don't have to make that trade off anymore, which is incredible.
Jason Jacobs (08:21):
I'm going to ask this from a place of intellectual curiosity, but don't talk about anything that you don't want to talk about. I'll ask this both as it relates to your family, but also just family offices generally, since I haven't spent a lot of time around people with significant family offices historically. And so both in your family and what you observe from others who are in a similar position, does it tend to be that each family member operates independently and makes decisions on their own? Or is it more pooled resources across the family? One of the reasons I ask is because I've been hearing a lot about this generational shift in families where the new members coming up push the old guard in some different ways than maybe they've operated historically. I'm just curious what you're seeing in the trenches in your family, but also just generally across people in a similar position.
Steve Simon (09:10):
It's every flavor of it. It depends on the generational ages of the family members and the journey with first and second generation, or in our case we're in a third generation where we have kids. But I think we've traditionally done pools of capital together. As family members evolve, they want their own pools of capital, their own journey of financial acumen and sort of ability to put their own capital to work. I think it varies. Some families stay together, they have a core operating business. We're very aligned. We invest and do philanthropy together, and also as members we can invest on our own, and you see it every way. But it's exciting to do stuff together, learn together, and then have conviction on our own to do stuff that we may want as individuals to invest in or do philanthropically and have that flexibility. So I think that you see that in families.
(10:05):
My father, Herb Simon, is doing wonderful; 88 years of age, vital. It depends on the patriarch. He's always been, whatever brings you happiness, do what you want, this is your journey, I support you, and this is your expertise and passion. And sometimes there's a patriarch who has a very defined way things go, and that sets a generational tone for a family, and there's no right or wrong way to do it. It's been fun to do together mostly.
Jason Jacobs (10:33):
I think back to when I was running a company and sometimes there were situations where the lawyer would give me the pure lawyer answer. It's like, "Well, in this contract you should push back on this." And it's like, "Well, but here's the one or two things I really care about, and those things over there..." Let's just do a gimme because I don't want to make a stink. And so it was more about the psychological side where the lawyer isn't necessarily as close to it. I'm wondering if that similar intention manifests as it relates to financial advisors and returns. And I mean, one example is if you look at trusts, for example, there might be a tax benefit to set up a trust, but there's also implications as it relates to future generations that should be considered that have nothing to do with taxes. And so how does that manifest as it relates to impact and returns?
Steve Simon (11:22):
By the way, lesser on this role, I've had plenty of attorneys tell me I'm crazy. Our job is to both internally and with external counsel have great advisors, and have the conviction as principals to make sure we have guardrails, but that we can get done what we want to do. It's just a balance of, I think, being thoughtful and having great advice. Sometimes there's tension in putting capital to work. Traditionally, fiduciary responsibility is both a beneficiary and a trustee and as a capital allocator that have generational implications and affect relationships. But our job is to be prudent, give good advice, and as the capital allocators or principals having the final say, but making sure that we think about the big picture and all the ramifications of putting capital to work. But we fight with lawyers, and at times lawyers agree with us and we have good counsel around us.
Jason Jacobs (12:15):
When did climate first start showing up on your radar as an area of concern?
Steve Simon (12:21):
Long ago. Long before even An Inconvenient Truth came out. But part of it, there's an opportunity also to forgive ourselves. I have a lot of guilt for not taking action earlier. Our job is to be soft on ourselves, forgive ourselves, but long ago, even before, but remember going to show Lee Scott and the Walmart team An Inconvenient Truth with Lawrence Bender I got to know back then and made the film and taking Al Gore there to talk to Walmart. That's where I met Andy Ruben, who was the first head of sustainability for Walmart and runs Trove, which is doing great stuff around brands taking back their product and getting into the consumer, and really taking for-profit capital allocation around climate. It was many, many years later.
(13:05):
So I've always been thinking about it. Did it in selective areas, but as far as thematically saying, "We want to be doing a hundred percent impact climate," and I think equity and how they intersect as this broad theme, it took us a lot of years to get there over time. Reallocating our pools of capital and just thoughtful around ESG, and then taking our capital and putting its work with some great companies and great capital allocators and funds. It's been a 20 plus year journey, and I think we're just getting started, which is great.
Jason Jacobs (13:38):
How much learning did you do before you started deploying capital? And how much did you utilize capital as a way to learn? So I guess what I'm trying to ask, maybe I'll try to ask it in a more-
Steve Simon (13:50):
You don't even have to, I so get it. I so get it. We've made-
Jason Jacobs (13:54):
... like, what do those first few steps look like?
Steve Simon (13:56):
... we've done well, we've made great mistakes, haven't always been capital efficient, and had the ability to make mistakes and hopefully be thoughtful about it. But if you look back at the learnings of what you could have done, what you should have put capital in, what you shouldn't have, misidentified partners and entrepreneurs and folks to back who didn't have the conviction and DNA. We've made all kinds of mistakes and we've fumbled around and done okay, and we want to just continue to get better and better in how we're thinking about it.
(14:23):
The diligence around putting the capital to work, and then I'm a Hoosier, I'm from Indiana. Spent a lot of my time in beautiful northern California and I'm back in my home state and home city of Indianapolis a lot, and we think we have an outsized opportunity in the state of Indiana to be both capital investors, obviously a lot of our philanthropic efforts are there, and having relationships to play around policy and advocacy, but we think that's a supercharged place given our Hoosier roots and some of our other businesses there to synergize and leverage some opportunities. That's exciting. A lot of our work is taking us back home, which is great.
Jason Jacobs (15:02):
One of the things that I've been learning about on my capital allocation journey is that there's many different flavors of capital. There's strictly returns based, and there's capital that marries returns and impact, and then there's capital that is more focused on impact even if it's at the expense of returns, or more or catalytic capital that can maybe inspire other capital off the sidelines or take risks that other capital isn't willing to take, or things like that. Do you have a certain flavor that you use uniformly? Or are there multiple flavors? And is it separate buckets? How do you structure it either in real life or even in your mind?
Steve Simon (15:37):
A permanent capital family office that has some flexibility and has some funds in their fiduciary responsibility in their specific mandates and all the stuff around that. I think if you talk to family offices, and there's some great families where I could shout out who've been mentors to me and really help me along, that ability to mix and match and do stuff, preservation of capital, lower rate of return. Or, there's a way to do that purely philanthropically or pair some other sort of investment around to seed that. Or seed it with a little philanthropy and then have an opportunity later to put investment capital and play around with the risk reward and the return expectations.
(16:18):
I talk to other families, but that's a luxury to be able to do and have that flexibility. We think about some guardrails and some prudence around that, but we definitely play around with that as a family and as individuals, and that's great to have that. That's a luxury. We want to be capital efficient. We want to really be, like you're learning with your investments, really be not only the diligence of putting capital work, but like, "Wow, I want to really be thoughtful and diligent and have granular real data on the actual impact that's happening." That's really important. That's another piece of the diligence of putting this capital work in whatever the flavor of sort of investment to philanthropic, to debt, to whatever. I think that's a huge responsibility to really independently be really astute and data driven about what is actually happening so you can continue to learn and allocate capital better, and really measure the impact in whatever vein of investment or putting capital to work that you're doing. I think that's huge.
Jason Jacobs (17:19):
How long have you been investing in climate? And is it a specific category, one of the specific categories that you focus on? Or is it more opportunistic in terms of when you allocate in this direction?
Steve Simon (17:30):
It's a bit opportunistic. We've been investing professionally around climate with real folks who are experts for a number of years. We have some direct investments in regenerative ag and some other spaces that we think we want to be able to continue to put capital to work on, and also catalyze sort of the impact around. But we do from early stage to later, we do stuff around regenerative, around waste, around this whole journey around electrification and trying to find folks that we can put capital around, that can teach and evolve us, have a specific strategy, and then also in a lot of cases have a specific enough relationship where we can find stuff to do together, and they understand us enough to sometimes pull out the synergy of some of our other businesses or relationships. So it's evolving.
(18:22):
I think as we go forward we'll be a little more prescriptive about how we do it, but in this sort of transitional phase we're mixing and matching. But we're certainly from doing a lot of direct investment around retail and consumer and brand and some other areas, we have the humility to know our limitations here, so we're going to certainly be as we go forward and have been a little bit more recently, allocating to real professional managers and funds and learning and working with them.
Jason Jacobs (18:51):
What are you optimizing for when you invest in this area? What does success look like?
Steve Simon (18:56):
Success looks like having a partner we trust and love and know and we can learn from. Success looks like we want to be making returns and grow our pools of capital, and then use those in various ways, whether we transfer that philanthropically. And we want to understand deeply the impact we're making.
(19:17):
You can look back in this direct investment or in this fund, here are the returns, but it's a piece of a puzzle. We want to be held accountable for making returns, and also make sure we're not so hard and fast about that that we can't learn and grow and make some mistakes. So it almost depends on the situation. If you ask me, "What am I optimizing?" I'm optimizing our learning, I'm optimizing doing within a vein well from an investment standpoint, and really looking at where that capital is going. It's great to have capital in climate in ways, and the flow of institutional and real professional capital. Because we need the scale of trillions of dollars just to electrify the grid, but can we find ways with some of our other relationships to catalyze something or have some additionality if you will. And particularly in the Midwest and the state of Indiana, is there something that we can catalyze that? That's another thing that is exciting to find situations of, but really depends on the situation. That was a shitty answer, I know. Can I cuss on this or no?
Jason Jacobs (20:22):
Oh, you can cuss. Cuss all you want. There's like a little box you can check that allows cussing on the podcast. We don't cuss often, although once in a while we do. I like having the option. I don't like anyone telling me I can't basically.
(20:34):
What about from a learning standpoint? Is it primarily through the capital that you are learning as it relates to this problem, or others that you care about for that matter? Or other ways that you get up to speed? And how are they typically staged? Does the capital follow the learning? Or does the learning follow the capital?
Steve Simon (20:51):
I think it can be both ways. We can put capital to work and then really accelerate our learning, and we can learn and put capital to work. I think we fumble around a bit. You think you'd have more of the bucket of real learnings and then capital put to work, but I think for us it works. I think you may find this in other families, or even your own realizations as from your start of MCJ to your knowledge now and the relationships you've built and the content and storytelling you're doing. I'm sure you've done a little of both too, but it's not prescriptive. Hopefully we're smart, we're diligent, and we're putting capital to work. We don't have the direct learning, but we have partners and folks who are giving us enough insight in learning to put the capital work, but we've blown it both ways.
Jason Jacobs (21:37):
Is it like a little percentage of the total assets? And this is the play money bucket, so we can be as crazy as we want, so we're just not going to put as much structure around it? Or is what you're describing here more the philosophy holistically across the areas that you invest as a family?
Steve Simon (21:52):
It started a small amount of capital, and certainly on the capital we're putting to work, it is a majority of impact. We have other assets and businesses, so if you look at our liquid investment capital, it's pretty high; if you look at some of our other assets. How can we be thoughtful there and use those platforms to be advocates around some of the stuff that we care about? That's a great opportunity. But the amount of capital going into this vitally generationally, existentially important stuff is continuing to become significant, and our job is to continue to push the envelope on that.
Jason Jacobs (22:29):
To the point where the professionals that I'm sure you have looking over the stuff are like, "Steve, cut it out."
Steve Simon (22:35):
Exactly. When I have folks around me who are saying, that's probably a good sign. Everybody has their own hat and their own comfort and their own fears and insecurities, and that's good. Yeah, I want people to say, not, "Cut it out," but, "Let me give you some counsel."
Yin Lu (22:49):
Hey everyone, I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change.
(23:16):
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming, like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to MCJcollective.com and click on the Members tab at the top. Thanks, and enjoy the rest of the show.
Jason Jacobs (23:50):
Are there some examples that stand out in your mind of ways that you've found to involve the assets and competencies of the family with either some of the investments or grant making that you've done that have been successful, impactful, that you're proud of?
Steve Simon (24:06):
Yeah, I mean, I think given our real estate and built environment stuff, there's been a number of companies that we've invested in that have found that synergy. Specific examples of where we put capital to work and then that informed our other businesses, or...?
Jason Jacobs (24:23):
You talked about one of the things that you are excited to try to do is not just put your capital to work but leverage the assets that cross the family's other activities to bring to bear in positive ways for the companies or nonprofits that you work with. And I just didn't know if there's kind of a playbook there or some examples that you found that are effective, or if you're still in the experimental mode in terms of trying to build those bridges.
Steve Simon (24:49):
Our learnings as owners of the Pacers Sports & Entertainment, and if I wear that sort of hat around our sports portfolio.
Jason Jacobs (25:00):
It's a nice hat to wear, Steve.
Steve Simon (25:00):
It's a beautiful hat to wear and it's been a incredible journey for the family to steward. Our learnings there have informed some of the stuff we've done. We can sometimes take philanthropic money and amplify it with what Pacers Sports & Entertainment are doing, or our brands are doing, and what the building's doing, and our journey around sustainability there; how we're thinking about it corporately, sort of learning it and encouraging folks to find their own passion and give back both in a corporate setting; and then there's specific ways like generate capital. And I think about, I have a lot of great mentors, and actually you're one of them.
Jason Jacobs (25:31):
Oh, come on. If my partner's listening to this, they're going to be like, "What was he talking about? Oh man." Or my wife. My wife would also take issue with that. But thank you.
Steve Simon (25:39):
But it's been from afar, like the humility of your journey and your learnings. The older I get, I know as little. Raise my hand like, "I don't know." I need counsel. So in a way you have been, but in the case of Scott Jacobs at Generate. I know you've talked to Scott and Jigar.
Jason Jacobs (25:56):
He's great. I met him in person for the first time a couple months ago. We sat next to each other at a dinner. It was really great to get to know him in person other than just over Zoom.
Steve Simon (26:03):
We're on the cap table there. It's a permanent capital vehicle; we're owners. And so in that case we're working on some stuff with them directly in some of their portfolio companies around waste, and this opportunity to electrify some of the municipal buildings and other scaled buildings in the city of Indianapolis and the state of Indiana and around electrification of buses and schools. We're working on some real exciting stuff around partnership. Scott's just being a mentor, and also just his beautiful enthusiasm to encourage me. That's been great. I think pairing that with something like our work with the Energy Foundation, which again is philanthropic capital, but Nat Simons, I have to give a couple shout outs, right? Can I use this platform for others?
Jason Jacobs (26:48):
Oh, please. He's also a great example. He was at that same dinner.
Steve Simon (26:53):
He's the first one who painted a picture for me, it's been a lot of years, but of this idea. And they do so a hundred percent climate. But the idea of really having that broad platform and getting your own confidence to connect the philanthropic, the investment capital, and then with conviction playing around policy and advocacy and being encouraging to others. That's been a huge model for me. He's got a bigger platform nationally in the state of California, but his encouragement there, our work with the Energy Foundation, and also melding some of that learning and trying to evolve the policy, the fertileness for more investment capital, some of that stuff is melding together nicely that it's paying a lot of dividends. To be helpful with the relationships we have in government and otherwise, all this flow of Biden capital. We're trying to help with our public-private partnership mindset the state of Indiana over-index, and really advocate for that flow of federal funds. So that's a way that we're working.
(27:51):
And that sort of squirrels around the policy and making it more fertile for investment. We want to do more investment with one of our brands, Force of Nature, which is doing great stuff around regenerative protein. Given the composition of ag in Indiana, can we be intentional and have some regenerative opportunities in acreage there, and also have the consumer attractive pull of Force of Nature? So we're working on some of that. It's like a portfolio company. Can we do stuff in our home state? Is there ways to pull those relationships together? I think we're just getting started on that in a way that's really exciting.
Jason Jacobs (28:26):
I'm going to ask you, I don't know if it's a philosophical or a theory of change type question, but one of the things I wrestle with is that in order to bring about change, if you care, you might do things that operate against your short-term self-interests, like for the benefit of the long-term for you and for everyone. And therefore if you don't do those things then it actually hurts you too because you have to live on this freaking planet. The wildfires and the flooding and the extreme weather and the droughts and the famine and the wars. Nobody wins if that's the way all this goes. But at the same time, you don't want to take your precious capital.
Steve Simon (29:07):
You're bringing up my Jewish, terror by the way. Now I'm like-
Jason Jacobs (29:10):
I'm just buttering you up for the big ask, Steve. No, just kidding. But the point is that all those things might be true that it's in your self-interest to make sure that we stay in harmony with the planet we rely on. But if you are living paycheck to paycheck, trying to put food on the table, or trying to figure out how to pay for your kids' college or things like that, then that's money that you need and you need to optimize for returns. And if you're worried that you're going to get less returns in the area that does better for the planet in the long term, you're going to operate against your self-interest to do it. Do we need people to operate against their self-interest to bring about change? Or do you believe that the only way forward is for change only to happen when it is in your returns driven, greedy short term self interest to put money in that direction?
Steve Simon (29:53):
I mean, I think it's a little of both. Some ways you got to operate against your self-interest, and then... I wish I had a better answer. It's got to be a little of both, right? Because we all have that human journey of what are our needs, and what are needs of others. I think we have to go against our grain, and then we have to go with our grain. We have a journey around doing that. So it's both. Being in my body thinking about it, it's both.
Jason Jacobs (30:19):
Yeah. I mean, look, I know you don't work on climate for a living, but just as a person do you worry, for example, that at some point things might get so bad that the luxury of being entertained by professional sport, for example, it'll just be so apocalyptic that people will be in survival mode and not worried about, "Where am I going to go for entertainment?" Do you think about stuff like that?
Steve Simon (30:38):
I think anyone doing this work and trying to find over time what they really care about and where they want to be and the relationships they want to be in and where they want to put their attention and their resources is going through some of that stuff. If you have kids, you can get so overwhelmed looking at, read the most recent climate report. At times there can be some paralyzation, but I mean I think anyone generationally with their kids or whatever, have to worry in that way and make peace with it and find some positivity and find some stuff they can do every day. But I can get, and I have traditionally, I can really worry in a way that is not bringing out the best in me, the best in the people around me, my relationships, even my family or in people I'm working with. And so you got to worry, given the reality. Teaching this next generation, teaching our kids about this stuff is important, but without the fear and terror and paralyzation.
(31:33):
We need so much thought around this, so much capital around this next generation orientation towards this; public private partnership around this, global cooperation around this. You got to find the beauty and also be realistic. And do I worry that people be under rocks and not watching the NBA? I haven't until you brought it up.
Jason Jacobs (31:54):
Sorry.
Steve Simon (31:55):
But I think how we're going to live and be in relationship, wherever you are, because of the effects of climate change, and if you think about this more equitable flourishing in the state of Indiana or anywhere, people who just don't have the means, man, to have mobility, flexibility, and there the effects of climate change on those less fortunate, man, we're going to see continued hardship and suffering. It's going to affect mental health and it's going to affect everything. We got to just keep working together and doing the best we can. We need the innovation. We need everything. But we got to find our joy too. I'm learning that just personally, so many blessings. So we got to find our joy, even in this work, even with the reality of climate change and what we're all seeing and reading about and learning about.
Jason Jacobs (32:43):
I'll give an example. I obviously work on climate and accelerating the transition for a living and care a lot about it and I'm very concerned about it. At the same time I have a deep... It's like ice hockey. It was a huge part of my upbringing, huge. Now part of my son's life, it's a part of my life on this journey that he's on in the sport. And hockey rinks are big energy hogs. And it's like, "How can I reconcile those things?" And it's like, "Oh man, don't ask me this." I deeply love it. What do you do? I can't say I have a clear answer.
Steve Simon (33:16):
I totally get it. Look, the energy generation of our buildings. There may be a part of me that I have some generational guilt consumption and the effect of consumption and consumerism on the planet. Just think about all that insatiable consumption. There's some part of me, I don't want to deal with beating myself, a lot of my wealth is created from, and with good intention and no malice from the prolification of shopping centers in the world, and uncoordinated freight and consumer traffic, and that consumption machine. So part of it is making peace with that created wealth, and there's so much of a platform to do good with that. And also thinking about how we evolve consumption, where we can play around that from conscious consumer to the reinvention of supply chains and product. That's exciting given our retail real estate roots.
(34:03):
But at times I've been like, "God, I got to make up for that." And I think that mindset, you got to make peace with your self and find all those ways to try to use your ability to reinfluence, reinvent those kind of things that are very carbon intensive and are contributing to global warming, and find a way to do it with a little bit of grace and still find humor. But I've done that. I don't know if you have that beating myself up, but I'm shedding that. We could talk to Josh Felser in our human evolution of our journey. But I have some of that in me. That doesn't serve me.
Jason Jacobs (34:40):
I mean you mentioned people like Nat and Scott Jacobs. It seems like, and I'm a relative newcomer still under five years into working in this area, but it's a short list of people like that historically that were out there doing the good work, swinging the size bats that people like that swing. Are you seeing the size of that group grow? And what has been the effect of the recent crappy macro changes on the size of that group that you consider peers looking to have an impact and allocate capital in this area?
Steve Simon (35:12):
I mean, that group is continuing to grow. I mean, I think that some of the difficulties now are probably tempered by the flow of all this federal capital, but there's market cycles and it's tough for companies to raise money and things have been reset. But as far as great people, and people like Josh Felser who was a really successful early stage investor with Freestyle, and we did stuff in the past. By the way, you're encouraging those people, whether they're professionals, entrepreneurs, to come over to climate. But if you think about families, entrepreneurs, people being attracted to this for all the obvious reasons, like that group is growing and growing and growing. We want to continue to grow our relationships. We have a lot of [inaudible 00:35:52] great families who inspire us and been on the journey longer, but this is going to grow and grow and grow. And knock on wood, nothing's going to stop more thoughtful people with means from putting their capital around climate and impact in general, for sure.
Jason Jacobs (36:05):
I know historically, or at least I've read, that you've tended to be more of a private person. How much do you think your colleagues in the sports world know about your activities and passion in this area? And do you hear much about it from others in the sports world, or is it pretty insulated from it still?
Steve Simon (36:23):
We have relationships with our partners at the NBA and our fellow owners. There's a lot of owners putting their capital work very thoughtfully around climate. I think in all our relationships, whatever hat I wear, me being myself more and people knowing what I'm passionate about, there's no need to have to mix and match. Even across the political spectrum, working with people of across the spectrum to find specific things to do together. I think there's no reason to not continue to be ourself. We're working with our platforms and brands and these other advantages we have, and we're continuing to, when we talk to people, find stuff to do together and realize there's a lot of us doing the same thing. I mean for sure it's not a dirty topic in the pro sports world or with my fellow NBA owners. We're all thinking about our buildings, our platforms, our players using their voices, what they care about, using our brands for environmental and social justice and catalyzing. It's a beauty to have that all grow together, if you will.
Jason Jacobs (37:23):
Yeah, I worry sometimes that I'm in a bit of an echo chamber. For example, yesterday I heard from someone, I don't know if it's true, but he said that TED doesn't like to feature climate talks on their main page because no one listens to them relative to other stuff.
Steve Simon (37:39):
Oh, TED was great, TED was great. I'm like, I've never been to TED.
Jason Jacobs (37:42):
I've never been to TED. I just worry that it's, "Oh, in the climate world we talk about this and we talk about that, and we've got our own lingo." But I don't know. I look at my brother's world in financial services for example. I don't consider myself an activist, but I think some people might look at the fact that you work in the clean energy transition for a living and just assume that you're going to be laying yourself in front of cars at rush hour or throwing paint on the artwork at the museum and stuff.
Steve Simon (38:06):
Forget about that stuff. And by the way, using our ability to inform communities and legislators and people from across the spectrum, there's so much waste. That's what I find interesting. There's so much to align on issue related stuff. I think telling stories both to people who haven't had that acclimation with real data and storytelling, and using storytelling as an emotive way, how these communities are affected, I think that's a huge, huge opportunity to just sit down with people and educate them. You can find so much to do together. So I don't know. Was I traditionally labeled a bleeding heart liberal or progressive liberal and that? I don't know. It may be quirky Hoosier hospitality. But being ourselves and also working with issue related on stuff that we care about with anyone, it's a pleasure to do.
(38:54):
And then my job in these relationships I have with people, I want to work with who a lot of times have a disagreement or a different view, be compassionately honest about my conviction that they're wrong on that issue and try to find this educational learning. I think that's a huge opportunity. It's happening federally, which is harder, and then all these states have these balance sheets and canvases to paint working bipartisanly on this stuff. I don't care what the composition of your state is, it's like fertile, fertile ground, and is exciting for us personally.
Jason Jacobs (39:26):
When you think about the intersection of caring about this global problem like climate change and also caring about your home state, what are some of the areas of intersection and opportunities that you're most excited about at that convergence of climate and Indiana?
Steve Simon (39:42):
Indiana's interesting. I think we emit the seventh most amount of CO2, but we're fourth in development of wind and solar. So there's this real interesting quirky dichotomy. But if you think of Indiana, there's this coal retirement, huge opportunity in the north part of the state in the region. I think three of eight steel furnaces are still operating in Indiana, so there's like that big infrastructural opportunity. Ag has been this huge catalyst of the state. There's this whole generational thing of next generation having things they care about to be able to have economics and own the farm generationally. But if you think of ag, and Purdue, there's some great partners, higher education partners. Purdue's doing really interesting stuff on ag and climate change.
(40:31):
But if you think about the journey and some of the misery of monocrop prolification in states like Indiana, there's this whole reinvention of ag that I think is really exciting because of some federal money and some other advantages. The crossroads of the state, there's some carbon capture opportunities. There's a lot of intersections, and reducing CO2 and all this stuff, we're everywhere. And then finding ways to do it in our home state, which also I think benefits the flourishing of all Hoosiers and their quality of life. It does fit together. We don't just work in Indiana. Of course our partners like Generate and other funds we're involved with are doing stuff everywhere. It sort of all fits together for sure.
Jason Jacobs (41:13):
Nice. And not to put you on the spot, but you're a recent MCJ Collective LP, which we're really proud to and grateful to have you involved. I'm just curious, what was it that got you over the line? It's more just a chance for my own customer development, because I know we've been talking about it for a while and then you kind of came in with conviction.
Steve Simon (41:31):
It's such an easy answer. We've done this before. Do we convince ourselves to do a first time fund even though you've been putting capital to work? This relationship we want to build, and then your differentiation. Everybody's got to have their differentiation, wherever stage they're playing. You're intentional or not intentional of bringing together this content and this community, these percolating relationships to find stuff to do together in your collective, whether it's philanthropic or starting companies, like that content community relationship and then capital is a very exciting thing to be a part of. I like you and your team personally and you have great intentions. So that's what got us to back up, if you will, first time sort of institutional capital fund. Because what you're doing is melding the storytelling and the building relationships and the one plus one equals three of people finding stuff to do together. We need so much of that. You're doing a great job.
Jason Jacobs (42:26):
Well, thank you. Proud to have you involved. It seems, to be honest, that, I mean, you're kind of the sweet spot of the types of LPs that are getting involved, at least in this vehicle. Because historically we had all these strategic, well-placed individuals, and that really fed the flywheel because it wasn't just their capital, it was their expertise, their time, their station, and wherever they sit in the assets that they could bring to bear, and that's created this nice flywheel.
(42:49):
But now the next evolution for us is more of the family offices and the multi-family offices and the fund to funds, et cetera, that are mission aligned though, that they don't necessarily need to be an impact vehicle. But we're not concessionary from a trends standpoint, but climate's still in a phase where you kind of need to care. And one of the things I wrestle with is as we look at building bridges directionally, whether it be for this vehicle or future ones, of the more mercenary, large institutional capital allocators, how do you build a bridge and what's holding them back? I mean, one obvious thing in my mind is, well, DPI. These paper marks are great, but let's get some actual returns from some of these climate funds. But I don't know. What do you think? What's keeping the large mercenary professional allocators from getting involved in a widespread way, and how do we get more of them into the party?
Steve Simon (43:35):
You're starting this with intentional LPs and the idea that you'll talk to your potential LP and know that they give a shit enough. That's great. That's great. But if you think about all these pools of capital, ultimately because of the scale of investment we need, you have to not give a shit that they may not give a shit and they want to allocate capital. As long as they're protected from the governance, from the relationship, you're going to find people who care at this stage with what you're doing and creating story and content around it.
(44:06):
But ultimately because of the scale of capital needed, you've had this capital series, I'm sure you're talking to people who are much more involved and astute about it. All the big folks seeing the evolution with JP Morgan who we have a relationship with, and they're thoughtfulness around this, they're coming, they're here. And that's going to grow, whether it's sovereign wealth money and large families, it's just going to grow and grow and grow because there's going to be returns. And everyone, to some degree, even with the fiduciary responsibility, gives a shit.
(44:40):
So whether they're attractive to certain vehicles, niche vehicles. We used to have this thing, we invest in companies and we would tell people, "We'll tell you our frailties. We'll say if our limitations as a partner back in a company." But we have this rule, the no asshole rule. Life's short, and so to sit around the table with people you care about, that's important for this stuff. But ultimately, and you've seen it over the last years, big flows, like the Alaska Perm Fund, the capital being attracted to Scott and Generate and their scale of what they're doing, even at a still smaller scale. Everyone's coming in because they're going to have to be a part of this, and they're going to find returns, and they're going to find in whatever governance they have that they want to be a part of this. It's just, it can't stop and it's not going to stop.
Jason Jacobs (45:26):
So this last question, it's more of a personal one. It's not climate specific. But just look at the next decade, the decade of Steve, looking back 10 years from now, what do you hope you'll have accomplished from this point looking forwards?
Steve Simon (45:35):
I think in the next 10 years, the idea of structurally setting up this impact mindset and have it as a generational sort of mandate or sort of embedded in the DNA of how we go forward as a family. That's something to make sure we accomplish. Our also job is to make sure we protect and grow our pools of capital. But the idea of it sort of being embedded in the DNA, and I think it's we're already there, we've got to make sure we do that. I'm not that young anymore. So we want to make sure it's embedded enough, it's in the mandate enough, it's in the doctrine enough that those kind of guardrails of what the capital can be used for in the future. I think we have a responsibility to do that. I think we're confident that that's going to be instilled. And I want to be spending more of my time on this stuff that I care so deeply about. I get to do that a lot, but I want to even do that more.
Jason Jacobs (46:25):
Awesome. And for anyone listening that is inspired by your work and your approach, who do you want to hear from, if anybody? Or how can listeners be helpful to you and the things that you care about?
Steve Simon (46:36):
We always want to continue to grow relationships, and people know about us enough to find potentially things that we're doing that we can be doing together. We just want to continue to be involved and a part of this community for our own learning and for our own relationships. We're accessible to anyone even though we're not consumer facing or platform notable, but we want to continue to grow relationships. We want to get smarter. We want to find more exciting things to do together. Your platform of relationships and some of these other great long-term relationships I have, continuing to find folks to work with and cheer for, is exciting. Yeah.
Jason Jacobs (47:14):
Great. Typically, this is where I say, "What didn't I ask that I should have, or any parting words for listeners," but I'm going to make it a little more specific. Speak to other principals in sizeable family offices for a moment, whether or not they're active in climate or not, or maybe it's even specifically the ones that aren't yet active. What message do you have for them?
Steve Simon (47:33):
Whatever your core business is, we need your ideas, your capital, your different perspectives. There's so much to do here. There's returns, healthy returns. Please come join us and learn and start to put your capital to work around climate or anything you care about. Whatever you give a shit about. I don't know. I said shit five times.
Jason Jacobs (47:54):
Good though. I like it. It's like taking a shot or something. It just loosens up the room.
Steve Simon (47:58):
I love what you're doing. The fact that you talk to me is so fun. I look forward to growing our relationship, and we're going to find more specific things to do together. And I'm thrilled to be an LP.
Jason Jacobs (48:07):
Well, really proud to have you. And also I need to give a shout out to our mutual friend, Jordan Fliegel, and what he's doing with the Techstars Sports Accelerator in Indiana, because I told him I would. Steve, thank you.
Steve Simon (48:18):
Jason, pleasure. Take care. Bye-bye.
Jason Jacobs (48:20):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (48:24):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (48:34):
If you'd like to learn more about MCJ Collective, visit us at MCJcollective.com. And if you have a guest suggestion, let us know that via Twitter at MCJPod.
Yin Lu (48:47):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ venture funds, be sure to subscribe to our newsletter on our website.
Cody Simms (48:56):
Thanks and see you next episode.
