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My American adventure: making an impact in Xela

Posted on October 13, 2017 by VMcCarthy

Lago Atitlán, tranquility personified.

Hola mis amigos

It is Wednesday evening here in Xela, Guatemala. I am writing from my apartment, with my panoramic backdrop of the city surrounded by the mountains, the various shades of blue as the mountains and sky meet before the night sets in is something to behold. I have a bit of Eddie Vedder playing in the background, a strong cup of tea. Not bad at all.

The last five weeks or so since my last blog have been busy. I started working with Alterna Impact at the start of the month which has been interesting. I took in a puppy short term to provide some help to an organisation here that saves street dogs. We celebrated Guatemalan Independence here in Xela, what seemed to be a full month of weekend celebrations. As well, I took a trip to Lago Atitlán , an amazing spot to get away from everything and recharge the batteries.

Nature sent us a message too. We were hit with an 8.1 magnitude earthquake on the night of September 7th. The epicenter was off the Pacific Coast. Mexico was hardest hit but it was felt strongly in Xela too; being in an apartment on the side of a hill that is shaking for a good 2 minutes is quite scary. We are in the so-called ring of fire here in Guatemala so I guess it is the risk you sign up for. What is the alternative, stay at home safe on the couch? No chance.

Working in the Impact Investment Sector

In early September I started my fellowship with Alterna Impact, an impact investment firm based here in Xela. Cheers to everyone who wished me luck. It has added a new dimension to my Guatemalan experience. First of all, there is a great group of people in Alterna, from different backgrounds and different countries. There is a real sense of people being excited by the work they do rather than simply working for the sake of working. We are in Guatemala; these people are not doing it for the money.

Secondly, I am genuinely interested in the impact investment sector. So it is a great opportunity to assist in the development of Alterna’s investment strategy as they prepare to invest in Guatemalan social entrepreneurs over the coming years. In my first few weeks I delved into the sector, reading material from various participants – advocates, investors and investment firms – before writing a 20 page paper on the sector and my thoughts on what I believe is important in terms of defining the investment process. It was a bit philosophical in parts, but that’s what you need if you want to provoke thought.

I was chatting about some of this stuff with some colleagues and one of the Italians, a sound guy who works on the data side, got a laugh off me saying I was a philosopher. ‘Finance and philosophy, they go together right’ he said with a wry smile. Of course I was saying it half in jest, I am not a philosopher in the Socrates sense of the word. But I am someone that believes in questioning everything. For me, the impact investment sector is fundamentally about the pursuit of a new approach to investment and business so why be constrained by traditional approaches.

Since, my report has been the springboard for some interesting brainstorming sessions among our team as we have debated out various aspects of the investment process. The first step is about arriving at your investment philosophy that you can truly believe in and most importantly articulate what it means, beyond your standard jargon. Once you have achieved that, you can work towards setting a strategy to achieve your agreed objectives. Core to everything will be the explicit adoption of a stakeholder centric business model as a conduit for social change. It is interesting to be part of this process and to know that after I have left Alterna (I am contracted up until the end of December) and Xela I’ll have made an impact in an indirect way.

Lago Atitlán,, a volcanic lake in the Western Highlands of Guatemala. A great place to gather your thoughts.

I have been asked by some people at home ‘why don’t you just go travelling, why bother working if there is no real financial gain?’ I don’t believe money should ever be the main motivator for doing something. For me the challenge and experience is living and working in another country, immersing myself in the language. I am lucky enough that I like the world of economics and investments, just as I like writing. Around that if I can work with good people, have some autonomy and flexibility, then I am happy. I have that with Alterna and so I haven’t had to sacrifice on my main goal of becoming fluent in Spanish. Xela is a great place to make that happen.

Spanish progress: Podcast Xela 2017

So I am fast approaching almost five months of living here in Xela, learning Spanish. What level I am at now? I don’t think I can give you a precise answer on that. It is one of those things about learning a language; it is difficult to gauge the progress from week to week, month to month. I don’t overly focus on trying to gauge my progress; otherwise I believe you open yourself to a lot of frustration.

Still, I would say the difference between now and when I arrived is night and day. Conversationally I am much more comfortable, but there is a long way to go to be at the fluency level that someone described to me as ‘being able to be exactly the same person in Spanish as you are in English’.

Con mis mejores amigas, las gemelas, Isabel and Laura, de Nashville, Tennnessee.

One of the things about travelling is that life can be fairly transient, people come and go. It is a little different living here because I know more locals or other foreigners settled here but the students come and go. Two people I have shared almost my entire Xela experience with are Isabel and Laura, identical twins from Nashville, Tennessee. They arrived in the same Spanish school about a week and a half after me. We hit it off instantly and like me they decided to stay longer than planned, leaving Xela just over a week ago to return home to Nashville. The reason I tell you this is that the weekend before they left we recorded a podcast for fun, a 50 minute conversation in Spanish.

The podcast was a way of recounting some of the memories we shared in Xela but also a nice way to mark our progress in learning Spanish. I think when I arrived if someone had asked me what kind of progress I’d like to see, I’d be very happy to be at the level of being able to record a podcast in Spanish with friends some four months later. We know it is not perfect, there are mistakes but we were able to communicate without any issue and could have easily kept chatting. In the end of the day, that is the essence of learning a new language, being able to communicate with others. I think it is a good motivation to keep going. Click below for the podcast, with a five minute intro in English.

Torres – my Guatemalan street dog

One of the more interesting things I have done since I have been here is to adopt a puppy short term. Walking into the city centre one day my friend and I came upon a group showing puppies for adoption. We learned the group was GUAU XELA, a group of volunteers who work hard to save the lives of the abandoned street dogs of Xela. My friend and I debated the practicality of adopting a puppy. It was hard to walk away but we eventually did, some hour and a half later. However, the organisation got in touch with me and asked me to take a puppy short term, to help with feeding and injections while they found a permanent home. Hence, the arrival of La Niña, Torres!

La Niña, Torres!

It was a scared skinny puppy, full of fear and no bark. I gave her the name Torres after the Liverpool legend, Fernando Torres. For some perhaps, probably United fans, that is the final act of cruelty, naming a dog Torres. Still, when she left on Saturday (Oct 7th) for a permanent home, just over a month later, she was fattened up and with the relevant injections needed. She had not shaken all her fear from her abandonment on the street but she had found her bark. She was so afraid that it was very hard to really connect with her but it was nice to help out and make a difference. A small difference in the grand scale of things but a big difference to this little puppy and the life she will have. Buena suerte Torres!

Sadly, many dogs are maltreated here. Everyone that has been to Xela is aware of the problem of “los perros de la calle” (the street dogs). For some people, dogs are just animals. For me, dogs are a courageous, smart and loyal animal. Look at the amazing work of the rescue dogs in Mexico recently!

After my experience with Torres, I decided to set up a fundraiser to raise money for GUAU Xela. Their motto is: “Somos un Grupo de Voluntarios, DISPUESTOS a trabajar por los que no tienen voz” (We are a Volunteer Group, WILLING to work for those who have no voice). I’ve seen how passionate these volunteers are but they require more funds to be able to pay for food and in particular the veterinary work needed to restore the dogs to good health, as they work towards finding permanent homes for these forgotten animals.

Donate: Link – Help man’s best friend by supporting GUAU XELA, saving dogs!

The day I dropped her off, fattened up after a month of good feeding! She is smiling like a Tibetan fox. 🙂

Why bother with Guatemala you might ask? And dogs? I think it is an excellent use of a donation because the marginal utility of your €/$/£ is significantly higher than a similar donation at home, i.e. your donation goes further and you can make a real impact. Also, there are no middle men.

Charity has become a business and the various scandals have created skepticism on the use and effectiveness of donations. I still favour the small community groups on the ground. In this case, the money will go direct to pay for the veterinary costs; remember the people involved are all volunteers. In the interest of ensuring full transparency I’ll provide a full record of the use of the funds raised, including veterinary receipts.

There are a lot of problems in the world. Sometimes the scale of the problems are so huge that people become apathetic, that feeling of ‘what’s the point? One person can’t make a difference.’ That’s why I believe in starting small, making an effort to help the community around you. GUAU XELA is doing that and they just need some help. I can take in another puppy but I can make a bigger difference if I can motivate enough people to make a small donation. Help out if you can. Cheers.

Chente

Posted in Business Strategy, Decision Making, Emerging Markets, Financial Markets, Guatemala, Human Capital, Impact Investing, Philosophy, Risk, Travel, Uncategorized | Comments Off

My American adventure: back in the investment world

Posted on September 4, 2017 by VMcCarthy

El Cañón del Sumidero, Chiapas, México

Hola mis amigos, Guatemala has me now.

Once de la noche en Irlanda. Cinco de la tarde en Guatemala.

Friday evening here in Xela, the heavens have opened up, so no better time to pen a few notes on what has been going on over the last month.

Mi español – measuring progress

My Spanish is progressing well, another productive week under the belt. When learning anything new there are the ups and downs but it feels great when you come off the back of a good week. One of the things I have found particularly helpful is reading the business section that comes in one of the local newspapers every Tuesday and using it as a learning tool with my teacher.

Bringing a little bit of Ireland to Café Armonía, home of the best coffee in Xela! Irish coffee is soon to be added to the menu with an Irish coffee evening planned.

How do you measure progress?

When you are learning a language and you have those off days it is easy to lose sight of how far you have come. One positive I take is that two weeks ago I had an interview completely in Spanish for a fellowship opportunity with Alterna Impact, the impact investment firm I wrote about in my last blog. More on that opportunity below, but even just from the Spanish perceptive it was a nice reminder that I am progressing.

Of course, I know it is still a long path ahead to full fluency. Roma no se construyó en un día (Rome was not built in a day).

New opportunity in Xela – Investment Fellow

The beauty of this adventure is being fully engaged in life but in the sense of simply going with the flow rather than forcing or chasing some end destination. As I wrote a few months back, “no hay prisa” (there is no rush). I meant it. I am still in Xela because it feels right and it has presented me with more opportunities to develop. My main goal of becoming fluent in Spanish is progressing well and this is the place to make it happen. Most recently I have been presented with another opportunity.

As you’ll have gathered from my recent blogs the world of impact investing intrigues me. So to have the opportunity to work in the sector was something I couldn’t turn down. Last week I accepted an offer from Alterna Impact, the impact investment firm I wrote about in my last blog, for an investment fellowship with their business cultivation team, thereby agreeing to commit another four months to life here in Xela. I am very excited about this for a number of reasons.

First of all, I had three or four meetings with various people from Alterna before they put the offer to me and I can tell they are going to be good people to work with. I would describe it more as a collaborative process to determine where my experience can lend itself to the development of Alterna’s investment process balanced with my desire to learn more about the sector and to work with entrepreneurs in Guatemala. I know I can make a worthwhile contribution but I am also going to learn a huge amount.

Part of my mandate is a research project on best practices worldwide in the impact investment sector. So I am particularly interested to learn how impact investment firms are measuring the underlying social impact. This is one of the frustrations of investors who have capital to allocate to the sector, whether or not the underlying companies are delivering on their social impact objectives.

Among other things, I am also interested to see how does a more socially conscious company take explicit consideration of negative externalities, such as the impact on the local environment, when assessing rates of return? Of course, investing with a social conscience still requires a viable investment case so ensuring a robust due diligence process will still be paramount as Alterna prepare for a new round of investment in Guatemalan entrepreneurs.

Now not only will I be immersing myself in Spanish but I’ll be immersing myself in the world of impact investing over the next four months. The added benefit is that the vast majority of my interactions with colleagues, entrepreneurs and investors will be in Spanish. All in all, I see nothing but positives with this opportunity. I start this Monday (September 4th) and I am sure I’ll have plenty more to write on this topic over the coming months.

Social responsibility at a human level

I am convinced more socially conscious investing is the future. Businesses across the world need to be much more social conscious. Rising inequality, climate issues, and even human wellbeing are among the by-products of a system narrowly focused on maximising shareholder value. The impact on other stakeholders is an afterthought. Discussions of this nature tend to gravitate towards a capitalism/socialism debate, as people rush to one side or the other. There are no sides. We all share the same planet and unless the business world adopts a more socially conscious attitude we are all finished.

(Of course more is needed from governments but let’s be honest the business world and their lobby groups call the shots. Also, the bureaucracy of the civil service impedes change whereas companies with strong leaders can implement change quickly.)

El Cañón del Sumidero, Chiapas

Even if you leave aside climate change and the destruction of the environment, an unwelcome inheritance for future generations, more can be done now to create a more socially liveable environment for the current generation. Ireland is considered a wealthy country with a high standard of living yet I read today that nearly 400,000 medical card holders were prescribed anti-depressants in 2016, an increase of 50,000. It seems even if the planet does survive people will be too depressed to enjoy it!

How can a business be more socially responsible even just a human level? If I was CEO (one day) I would start small and employ some creativity. I’d challenge and empower my colleagues to find mutually beneficial solutions. Long commutes at peak traffic hours are a mindless waste of energy. Allowing more flexible hours is a no brainer. I mean real flexibility. Two parents working has become the norm with kids being sent off to expensive crèches. Net net, nobody wins, except maybe the crèche owner. There has to be a better way. Children need their parents. All the toys in the world are not as valuable as a parent’s influence in the formative years.

I’ll save the rest for my manifesto. I will say one last thing. Businesses can lead change but individual responsibility is the only thing that can sustain change. Do employees want to be treated like school children being told what to do or like adults with the autonomy to make things better in an organisation? No matter what someone’s position in an organisation I believe if you put trust in them they will repay it. Just like any team, there will be some not up to the challenge but over time you can build your team with people you can be confident in.

San Cristóbal de las Casas, Mexico

One of the highlights of the last month was the week I spent in San Cristóbal de las Casas, Mexico, with a couple of friends from Xela.

The tourist visa rules require foreigners to leave every 90 days, technically for a minimum of 3 days, and Mexico is the most convenient country to visit. It is a bit unusual but it is not the worst problem in the world to have. This was my third trip to Mexico and it is yet to disappoint (I won’t count my surreal Tijuana experience when I first moved to San Diego).

Ell centro histórico de San Cristóbal

The colonial city of San Cristóbal de las Casas is in the centre of the Mexican state of Chiapas, Mayan territory. The journey is a good 10 hours by bus from Xela due to the poor condition of the roads and time taken up at the border. For those flying, a flight from Mexico City to the nearby airport in Tuxtla Gutiérrez would be handy.

The city is well worth a visit! The architecture, the cobbled streets, the people, the food and the nearby scenery all make San Cristóbal a special place. The natural scenery at the canyons of Sumidero, about an hour outside San Cristóbal, is spectacular. The free walking tour of the city is amazing. We had a guide named Carlos from Mexico City, a legend who claimed to be of Aztec decent and who could talk for Mexico, despite his love for the sweet Mary Jane. He was a man of the people and he brought my friends and I on an epic cave tour a few days later.

Due to its colonial style architecture the city has been likened to the city of Antigua, here in Guatemala, but for me San Cristóbal has much more character than Antigua and has yet to be invaded by the high end North American tourists. You know the package groups who are herded around the city like sheep, led by a guide with a flag in the air so that none of his flock strays. Of course you can only really appreciate a city when you stray aimlessly without any purpose. They tended to be our best days in San Cristobal.

Xela 2017 and beyond

This coming Wednesday I’ll be four months into my American adventure, an adventure I feel could stretch much longer than what I might have anticipated before I left Ireland. Although in truth I’d no real timeframe in mind, preferring to leave the construct of time at home and to just live for the moment right now. A tad philosophical maybe, particularly for those focused on looking ahead rather than what is in front of them. I’ll see how the next four months go here, I might stay longer, I might start heading South, I’ll decide at the end of the year. I am focused on now.

Don’t look too far ahead.

Chente

P.S. This is our year! #YNWA

Posted in Business Strategy, Decision Making, Education, Guatemala, Human Capital, Impact Investing, Leadership, Mexico, Thoughts, Time Horizon, Travel | Comments Off

My American adventure: new ways of immersion

Posted on July 31, 2017 by VMcCarthy

“I get by with a little help from my friends”. My attempt at art to say gracias for help I received from my Spanish teacher.

Hola mis amigos, la vida es buena aquí en Guatemala.

I’ve been living in Xela for just over two months now. My Spanish is improving every day and I’m finding new ways of becoming immersed in the city. I have tried to make a difference by leading a new project, a weekend coffee tour to Santa Anita, a community of ex Guerrillas who now harvest organic coffee. I have also continued to pursue my quest to learn more about impact investing, recently meeting with a local impact investment firm called Alterna Impact.

As I may have conveyed in my previous blog I had been on a serious run of good luck – in terms of how everything has just fallen into place for me – so it was about time things took a brief pause. A couple of weeks ago I had to spend a night in hospital after surgery on a fractured finger, an injury I picked up in a soccer match. I know an injured finger doesn’t sound like much but it is more the general experience. Still, I was blessed to have my Spanish teacher Dora help me through it.

Despite the odd speed bump life is good here in Xela. In some ways it is hard to believe how settled I feel here in such a short space of time. The Friday before last I threw my first barbeque on my terrace overlooking Xela and the surrounding mountains; half the group were other foreigners and the other half were locals but the conversation was in Spanish. I think that progress makes me feel more connected to Xela and feeds a desire to stay here and follow through on my goal to become fluent in Spanish.

“The people are the only ones capable of transforming society.” – Rigoberta Menchu

Shortly after arriving in Xela I reached out to a guy by the name of Willy Barreno, an ex-guerrilla fighter who is now fighting to create what he calls “The Guatemalan Dream”, a viable alternative for locals who, starved of opportunity at home, are forced to make the treacherous journey north in pursuit of the so-called American dream. Willy learned first-hand the illusiveness of the American dream during his own 12 years working in the US and the challenges facing Guatemalan emigrants.

Santa Anita Community – the local school

Inspired by a fellow Guatemalan, also disillusioned with life as an emigrant, Willy co-founded DESGUA (see link), an organisation focused on ‘creating economic and educational development with and for returned migrants and Mayan communities in Guatemala”. He also runs La Red Kat in Xela, “a social enterprise restaurant and cultural centre”, a haven for Mayans to regain their identity but also importantly a place for connecting people and for the exchange of ideas and information to flourish.

Willy likes to challenge the traditional notion of simply money as medium of exchange. ‘We’re making a trade right now. Every interaction is an exchange and we can learn from each other in this trade of information’ I remember him saying to me the first time we met as he pondered how random it was for us to be even sitting in La Red having the conversation. His philosophical wanderings steeped in Mayan learnings made me want to hear more but it was the conviction he conveyed for actually bringing about change which really peaked my interest.

More than a coffee tour!

Discussing the history of Guatemala Willy recommended I watch a documentary he helped make called “Voice of a Mountain – Life after the 36 Year War in Guatemala” (See link to documentary). After learning about Santa Anita, a Guatemalan farm community consisting of ex-guerrilla fighters who now harvest organic coffee, we discussed the idea of setting up a coffee tour as a way for others to learn the history, while also helping out the community.

Jumping right in I designed a flyer for a mid-week showing of the Voice of a Mountain documentary, which we used to generate interest among the Spanish students in Xela. We had more than 20 at the first showing. I followed this up with a flyer for the tour to Santa Anita and set up a Facebook page @SantaAnitaCoffeeTour. With the help of a recent graduate who is interning at DESGUA we successfully ran our first tour to Santa Anita the weekend before last with a group of 10 people.

The scenery, the people and the history make it so much more than just a coffee tour. It felt great to have been part of actually making the weekend possible, with a truly engaged group of people. What started out as an exchange of information with Willy Barreno culminated in a memorable weekend in Santa Anita, what I hope will be the first of many more tours that we run to Santa Anita. It is a great way for foreigners visiting to learn more about the history of Guatemala and the 36 year war from a community of people that was at the heart of the struggle.

Julio, ex-guerrilla fighter who gave the coffee tour

Of course, the wounds are still fresh and it not easy for these people to open up. We get a glimpse into their lives but these people carry the emotional burden that comes with fighting a war. I was reminded of this on our bus journey back to Xela, joined by an ex-guerrilla fighter named Gonzalo. He was a nice man but he had the edginess of a guy that is always looking over his shoulder, his eyes darting every so often to some minor activity outside the bus. I suppose it is normal given that he joined the guerrillas at 14 and spent 17 years fighting.

As we got chatting he noticed my two friends seated beside me, identical twins. Gemelos (twins) he asked, before recounting the story of how his twin, also a guerrilla fighter, was killed at 17 in a battle with the Guatemalan army. We get to hear the stories of their past but these people have to suffer through the memories. They will likely never recover fully from the psychological impact of war but maybe in some way talking about it might help.

“Vas a dormir ahora” (You are going to sleep now)

The fracture, less gruesome than the after pics!

Not for the first time, I ended up in a foreign hospital. This time for surgery on a fractured finger I incurred playing soccer. My Spanish lesson this particular morning involved my teacher bringing me to the hospital. I didn’t expect to be spending the night! The doctor explained that it was a displaced fracture which required surgery or my finger would be effectively deformed once the inflammation went down within a few weeks. That would be the end of my guitar playing career before it even got started. So I followed the doctor’s advice.

Four or five hours later I was on the surgery table with an anaesthesiologist giving me the heads up that it was lights out time. “Vas a dormir ahora” and when I came around I was out of it. I remember asking when they were going to start and it was a bit of a shock to see a pin sticking out of my finger. Then they had me in a wheelchair getting more X-rays before being brought back to my bed. Not long later they were wheeling me back down because the pin was too big and there was no circulation on my finger. I was wheeled into the X-ray room with an actual drill on the table that they needed to use. I don’t know what they did. There was the sound of a drill and blood so I looked away! It was a fairly strange hospital experience and bit of a blur.

I don’t like hospitals, they fill me with anxiety even I when I am just visiting. I don’t know if there is any other place that provokes as much thought and reflection in me. Lying in bed hungry (the operation was under full anaesthesia which meant I couldn’t eat) and tired waiting for my surgery, with plenty of time to think, I was reminded of my dengue fever hospital experience in Malaysia in 2012 and my mind wandered along the path of life that has played out since.

Five years I think to myself. I doubt the Vincent of over five years ago could have envisaged he would now be living in Guatemala having conversations in Spanish. A lot has happened since then. What would I change I wonder? There are a few things I would probably do differently but I wouldn’t change where I am now and the adventure I have embarked on.

Mi amiga Mila, my neighbour’s dog I practically adopted for the six weeks she was here in Xela! Reminded me of how much I love dogs!

The one thing hospitals can be good for is to remind people to live in the present and enjoy it. It is a shame that it takes a health scare for some people to fully appreciate life now (I am talking about more serious ailments than a fractured finger of course).

As the Roman Stoic philosopher Seneca wrote over 2,000 years ago:

“Life is divided into three periods, past, present and future. Of these, the present is short, the future is doubtful, the past is certain.….Life is very short and anxious for those who forget the past, neglect the present, and fear the future.”

The investment angle: more on impact investing

Last week I met with Tyler Hollenbeck, the Guatemala Country Manager for Alterna Impact, an impact investment firm founded here in Xela in 2010, “committed to developing the next generation of dynamic social entrepreneurs in Guatemala and beyond”. In my last blog I noted my scepticism about the motives of impact investment and how they balance the traditional return objective underlying any investment with their social impact objectives.

So I was keen to meet with Alterna and learn more about how they work with entrepreneurs. It turned out to be a very fruitful meeting. As I expected, “Impact Investing” is a wide encompassing category of investment and the philosophy and objectives of each impact company can be dramatically different. The balance each firm strikes between the profit motive and the social impact motive will also vary dramatically.

Alterna are much more what I had envisaged an impact investment firm being. Since it was founded in 2010 Alterna have worked with over 800 entrepreneurs and the company now has 36 employees, many of whom are hired under their fellowship program, ‘a program which has helped them bring top talent from the most innovative firms, universities and organizations worldwide’.

Santa Anita: amazing waterfalls on our hike.

While the incubator model of investment focuses on helping to build potential stars the accelerator stage is more focused on bringing star companies to the next level. However, where Alterna see a major gap is helping those companies that can grow from two employees to ten employees and be a meaningful driver of economic growth with a positive social impact. While these companies may never become a big global company they are the companies that play a significant role in the development of communities and the domestic economy.

At a family office conference (a family office is an investment group serving wealth families) recently held by the Family Office Club in the US one of the key takeaways was the interest in impact investment expressed by many family offices. “One family office spoke at length about sustainability and impact investing, which served as a reminder that family offices (and the families that they represent) are increasingly looking for a “triple bottom line” or some measurement of positive impact when it comes to their investments”.

However, the Family Office Club did note that there was also a scepticism expressed about what was really an impact investment, exacerbated by the fact traditional investments are being sold as impact investments by an adaptive financial services sector aware of the growing appeal of socially responsible investing.

Yet, even when they are sure an investment meets their “impact” criteria investors still find it difficult to move away from a mandate focused on return maximisation. “Even in the cases where a manager or a company is presenting a true impact investment, there is some resistance among investors who see achieving a social impact as a low priority compared to their duty to generate high returns.” Therefore, the future of impact investment will be shaped as much by the stewards of capital and their priorities as the firms at the forefront of this growing investment category.

The requirements set by the funding sources employed by an impact investment firm will to a large extent dictate the nature of the types of investments they can make. The more aggressive impact investment firms – in terms of pursuing return – will likely be able to attract more capital in the short term to invest but it may result in their investment universe being constrained and force them to compromise on their social impact objective.

Still, if less aggressive impact investment firms – those that can strike a more equitable balance between generating return and delivering a social impact – can successfully deploy capital to deliver reasonable returns that are sustainable they may be better placed longer term to benefit from a trend towards more socially responsive investing. A high success rate means lower default rates which in turn will factor into the interest rates an impact investment firm will have to charge the underlying companies. Of course, a “reasonable return” is very subjective.

I could write more on this but I’ll leave it for another day. The more I learn about impact investing the more it appeals to me as an area I might work in some day.

“Si hay confusión existe la duda, si existe la duda hay comprensión y tu avanzara en la vida” (If there is confusion there is doubt, if there is doubt there is understanding and you will advance in life) – Wise words from my Spanish teacher Dora.

I have now completed 10 weeks of Spanish immersion here in Guatemala. The first three weeks I was in a school and over the last seven weeks I have been taking private lessons every morning with a great teacher by the name of Dora. I think the school was good to get started and it was also a way of meeting people but I like my routine now where I do a bit in the morning and then get two quality hours of lessons in with my teacher. In the evenings I can make use of other things like Netflix, podcasts, books and even lessons on YouTube to change up my learning.

I have to give Dora a special mention in my blog because she has really helped me with my Spanish and she has really looked after me here. She has a natural enthusiasm and passion for teaching which is infectious and I have really enjoyed my classes. She is not the type that is watching the clock either, we often run over. The time flies by and I always leave her house with a positive feeling about how my Spanish is progressing and a determination to reach full fluency. As well as being a great teacher Dora is a genuinely kind person; at times I feel more like her adopted son. I was blown away by how much she went out of her way to help me through the hospital experience.

My teacher Dora, at her surprise birthday party this weekend. A great person.

Since my classes are at her house I have got to know the rest of her family too, her husband Frank, her grown up kids, her mother and even her aunt lives with them. This is common in Guatemala and I have to admire their patience living in such close quarters.

It is usually Dora’s elderly aunt or mother that lets me in every morning and they are so nice. Her mother is battling cancer and while the physical side effects of the treatment are noticeable you can tell she is a fighter. She still has her smile. Dora’s aunt was the youngest in a big family and it was a custom the youngest had to stay at home and serve her parents so she spent most of her life looking after her father. She didn’t get to go school and never even had a boyfriend. So Dora said her aunt is amazed by me being there and speaking Spanish. Hearing things like that are a reminder of the privilege of being able to pursue this adventure.

Soy un hombre con mucha suerte.

Chente

Posted in Education, Guatemala, Impact Investing, Philosophy, Thoughts, Travel | Comments Off

My American adventure: at home in Guatemala

Posted on June 22, 2017 by VMcCarthy

View from the top of Volcán San Pedro (Lago de Atitlán)

Hola mis amigos

I am now living in Guatemala.

Yes, Quetzaltenango (more commonly called Xela after its original Mayan name), Guatemala’s second largest city, is where I am calling home for a while. I have rented an apartment here with amazing views of the city and the surrounding mountains. While the city can look run down at first glance, its character will suck you in, as has been the case for me.

When I left Ireland I wrote “plans change, I’ll see where the road takes me”. Well the loose plan I left with has become even looser. I have embraced life here in Xela and the heavens have paid me back in spades with everything falling into place better than I could have hoped for.

First of all, my Spanish is coming along well, helped by the fact the city has remained relatively off the beaten path for gringos. I have got to know some lovely people here. I have a new football club with a passionate group of locals who love their football. I joined a boxing gym where I am getting trained by a local boxer (at high altitude, 2400 metres, the training is even tougher). I have even bought a guitar and I am starting lessons next week. It has been just over a month since I arrived, but it is fair to say I am immersed!

It has been a busy month since I wrote my last blog, but let me try and give you a glimpse of my experience so far.

Guatemala: la lucha continua (the struggle continues)

As you are probably aware, Guatemala is a very poor country, plagued by generations of exploitation by external forces. I have chosen not to write on the struggles of Guatemala as I would not be able to do justice to what is a complicated history. It is something I am learning more about from locals. One thing that is clear, is that the challenges faced by much of the population in Guatemala today – poverty, lack of education, immigration, endemic corruption etc. – have their roots in the country’s colonial past and a history of suppression. The indigenous have suffered the most. Peace was agreed in 1996 but the struggle continues. Still, deprived of education it is hard for the people to ever achieve the democratic revolution needed to wrestle power away from the few to change the fortunes of the many.

Bienvenido Vicente

Street in Xela. The city looks run down but it has a lot of character.

The arrival in my homestay family was a little bit of a shock to the system. I had braced myself for basic accommodation and food and the multiple generations of the one family in the house, but it was the snoring adult son that I could not deal with. The walls were literally shaking. We had an earthquake last week, 6.9 on the Richter scale; I am not sure which was worse.

The first night this guy kicked off – after I was a few days in the house – I knocked on his room door and in my best Spanish told him to sleep another way because I could not sleep in my room next door with his snoring. In fairness, he took the interruption well and I managed to get some sleep that night. However, the following night he didn’t even wake to my knocking. His elderly mother did however and again the 2am exchange in Spanish was interesting. It was Larry David type stuff! (Fans of Curb Your Enthusiasm will know what I am on about)

With only 2 hours sleep learning Spanish is impossible and so I high tailed it out of the homestay. I secured a move to another house, with some good intel from another student, where the mother of the house prides herself on the food she serves her students. The old couple who hosted were a bit pedantic – the most interesting moment was when I was scolded for wanting to take a second shower one day after my boxing training – but they were nice people and I was well fed for the just over two weeks I spent with them.

Spanish learning – poco a poca, pasa a pasa (little by little, step by step)

For the first three weeks I had five hours of classes five days a week in the Sol Latino Spanish School, starting at 8am. Five hours of one on one lessons is intense but as I learned more Spanish the classes became more heavenly weighted to conversation. The school was fine but I am now getting private lessons outside of the school which I prefer. This and the fact I have my own apartment means that my schedule is more flexible and so I feel more like I am living here than just passing through.

At times the Spanish can be frustrating. There are moments when I think I am making great progress and then all of a sudden I am lost for words in an exchange. Without fluency every interaction requires some level of thinking to arrive at the correct words, sentence construction and even pronunciation to convey your point. Therefore, your brain has to be actively engaged just to speak, which is tiring. I have a new found respect for all those people learning English in Ireland!

“The traveler sees what he sees. The tourist sees what he has come to see” – G.K. Chesterton

As is the case with learning any new skills it is effectively about building a database of knowledge that you can draw on with minimal conscious effort. It is only through practice can you refine and expand this database and more importantly reduce the time needed to access it, i.e. where you are effectively on auto pilot and little thinking is required to say whatever you want to say. That is my goal with Spanish and I remain convinced being immersed here in Latin America is one of the best ways to achieve it.

Of course even though I want to learn as fast as possible patience is important with any new endeavour. As I was reminded by one teacher: ‘poco a poco, pasa a pasa’ (little by little, step by step). You can’t rush the learning process too much.

Football – the universal language

While my Spanish is a work in progress I have connected with the locals through football, a universal language across the globe. After one of teachers got the okay from the owner of his football club, he helped me register with the local football association, a surprisingly official process. The same day we went to the sports shop of the club owner to buy some boots, another interesting experience.

The owner was welcoming and after confirming that I was a “delantero” (a forward) and a friendly interrogation on my football ability, they brought me a few pairs of boots close to my size and I settled on a nice pair of white Nike ones, the best fit. When it came to paying I was told ‘you pay in goals’. Welcome to Guatemalan football.

CIFUENTES – my new team in Xela!

That Saturday I headed up to the football pitch with the excitement of a child at Christmas. I love playing football and it felt so random to be going play for a soccer team in Guatemala. I was buzzing. While the pitch didn’t look great it was nice to see a stand full of locals. As I walked out for the warm up there was a few shouts, ‘el gringo’. It was great. I stood out a mile but I felt part of local life, not just a tourist

I could dedicate pages to my experience on the day but I’ll leave that for my book. It was just surreal, the team talk, the introduction, the warm welcome from all the players, the game itself, the locals cheering, all against this wonderful mountainous backdrop. I have played at a better standard in the past but it was all about the experience. The icing of course was getting four goals in a 6-2 win. Everyone was delighted afterwards. Chente, Chente, cuatro goles! Chente is short for Vicente here. I love it. It makes me think of Che Guevara.

We have since played another game and I got another two goals in a 5-1 win. The cheers when I scored were brilliant and it is definitely the first time I have heard people sing my name. Afterwards I joined the team for drinks and food back at their local and we had a great day of it. The rum was flowing and I must say Guatemalan hospitality is hard to beat. I was well looked after.

The big game is Saturday, a quarter final against the team who won the league last year (the league here ends with a playoff) and ‘they pay their players’ I am told. Stay tuned.

The places – discovering more of Guatemala

As well as the many places to see around Xela it is also a great place to use as a base to explore more of Guatemala. I have spent 3 of my 4 weekends outside of Xela exploring new places, visiting Chichicastenango, Lago Atitlan (Atitlan Lake) and most recently I spent 3 nights in Antigua.

Almonoga – known as the “Vegetable Basket of the Americas”

Chichicastenango is a traditional Mayan town famous for its Sunday market, the largest indigenous market in Guatemala. Lago de Atitlan is a beautiful lake surrounded by three volcanos and Mayan villages. Apparently the Lonely Planet Guide has called it “the closest thing to Eden on Earth”. Between chilling on the lake in a kayak and the climb of Volcan San Pedro (3,020 metres), I got to fully appreciate the spectacular views the lake offers.

Antigua, a famous colonial city and a UNESCO World Heritage site, is worth a visit but for me it was just too touristy and 3 nights was enough. I had planned on studying in Antigua but I am happy with my choice to make Xela my home here, a city that feels much more like Guatemala. I think Spanish immersion would be much more difficult in Antigua, the most visited city in Guatemala.

The investment angle – Impact Investing

During my stay in Antigua I took the opportunity to meet with Julio Martinez Anderson, Director of Acceleration at Pomona Impact. They are a firm that specialises in impact investing, a rapidly growing investment segment that is considered to be a subset of socially responsible investing. Ponoma Impact look to invest in ‘for-profit companies in a number of countries in Central and South America, commercial viable with sustainable growth prospects and that are really out there in terms of social impact’.

Beyond the jargon, what is impact investing? It is effectively the concept of investing money with a much more explicit consideration of the social impact of where that money is allocated, i.e. job creation, impact on the community and the environment etc. You would think that all money would explicitly consider such factors, but the overarching objective of most companies is to maximise shareholder value. There is no room for all stakeholders in the boardroom of a traditional company.

There is nothing quite like a chicken bus experience, the first of the breakdowns!

The anecdotes from locals on the activities of foreign companies here in Guatemala are a reminder of the dangers of the profit first objective of many companies. I’ve heard about the Canadian mining companies and their destruction of the local environment and the indigenous communities who live near sites where resources are being extracted. I’ve also heard about the treatment of workers in Chinese factories here, the 12 hour days with one small break when you can use the toilet. While I’ve just heard information second hand a quick google search would suggest these anecdotes are not fictional. Human rights are a second thought for many foreign companies.

So naturally given the stories I had been hearing I was intrigued to meet Julio to learn more about impact investing and whether there are some good guys out there trying to further the development of Guatemala in a fair and sustainable manner?

In Latin America, the vast majority of impact investments are structured debt, i.e. a form of lending to companies rather than equity investments which would typically carry more risk. The interest rates the likes of Ponoma are charging is in the region of 20-25% which was a surprise to me given the Good Samaritan image portrayed by these new breed of investors with their “social conscience”. When I pushed Julio on this he said these companies often have no other access to capital and when they do, the rates traditional financial institutions are charging is in the range of 30-35%.

One success story he shared with me was that of Wakami – www.wakamiguate.com – a company that Ponoma invested $100,000 in 2011 when nobody would give them money. In 2014 Ponoma made an additional $150,000 investment. In 2016, the success of the company meant they could access additional funding sources on more favourable terms and hence Ponama were paid back in full. According to Julio, Wakami has added significant employment to the local indigenous community with fair working conditions and pay. It also has a social arm to further the development of the local community, with education an important focus.

While the meeting was extremely interesting and Julio gave me some great insights into the world of impact investing, the more I read about this rapidly growing category of investment the more questions I have on the true intentions of so-called impact investors. Julio seemed to be genuine in terms of helping his fellow Guatemalans but I have my doubts about the wider category and the actual social footprint many of these investors will leave on countries in Latin America. I remain sceptical but it is something I hope to pursue further here in Guatemala and on my travels.

A good traveller has no fixed plans, and is not intent on arriving – Lao Tzu

My last big travel adventure (Oct 11 – Aug 12: China, Southeast Asia/NZ/OZ) was more of the traditional backpacking approach of hitting many different countries along a relatively fixed plan. It was a great trip but on this adventure I specifically wanted to embrace the unknown and let my experiences dictate the pace of my travel. The only clear objective I set when I left was to become fluent in Spanish.

View from my apartment in Xela at night. The picture doesn’t do it justice.

As it happened, I really like Xela, the people and the life I am living here as I learn Spanish the immersion way. I love starting my day with an amazing panoramic view of the city and the mountains from my apartment, making breakfast listening to Spanish radio, followed by the walk to school along the cobbled streets and the friendly “Buenos dias” from the locals. The trips to the food markets bartering with the locals, fresh avocados like you wouldn’t believe! That is just some of it. It is about the general vibe of living here and soaking up a new and very different city.

I don’t know how long I will stay. I’ll go with the flow and when I feel like the time is right to move on to another country I will move on. It could be a month, it could be six. Either way, having no precise plan or a fixed path is a nice feeling.

No Hay Prisa.

Chente

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My American adventure: Toronto and Mexico City

Posted on May 19, 2017 by VMcCarthy

Hola mis amigos.

As I write this I am on my flight out of Mexico City to Tapachula, a town in Chiapas in the South of Mexico and on the border of Guatemala. I spend two nights there before I make my way across the border into Guatemala, to live with a Guatemalan family and start my Spanish classes.

While it is still early days on my adventure, I could not have asked for a better start. My conviction for my decision to leave everything behind in Ireland and hit the road again has grown stronger every day. Continue reading →

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Leaving on a jet plane….

Posted on April 24, 2017 by VMcCarthy

Every great adventure begins with a goodbye.

So it is that I face a series of goodbyes over the next 10 days or so before I embark on my next great adventure, travelling across Central & South America.

Later this week I say goodbye to Invesco, a company I have worked with for almost five years (how the years fly by!). The fact that it is more than double the length of time I have spent in any other company prior to that speaks for itself. I have had good times here, made some great friends and worked with some nice clients along the way.

Therefore, the easy decision would be to stay and cling to the safe option, a path with a fairly high degree of certainty in terms of how my life plays out. But as the philosopher Alan Watts once said “a completely predictable future is already the past”. I have always tried to embrace the possibilities life offers and so I feel the time is right to pursue a new challenge. Continue reading →

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What a wonderful world…Spicer, Trump and Cheerleaders

Posted on April 18, 2017 by VMcCarthy

There were two press moments last week that summed up the craziness of the world we live in right now, both as you would expect coming from the United States.

The first came from White House Press Secretary Sean Spicer. When publicly shaming Russia for still supporting Syrian President Bashar al-Assad after the reported use of chemical weapons on his own people, Spicer gave the world a history lesson whereby Hitler and the Germans didn’t use chemical weapons!

“We didn’t use chemical weapons in world war 2. Someone as despicable as Hitler, who didn’t sink to using chemical weapons. So you have to if you are Russia, ask yourself is this a country that you and a regime that you want to align yourself with”.

The video has to be seen to be believed.

White House Press Secretary Sean Spicer claims Hitler didn’t use chemical weapons

It is perhaps Spicer’s attempt at clarification, referring to the NAZI death camps as “the holocaust centres”, which is worst of all. Remember this is the guy who is paid to deal with the press, for the most powerful government in the world. For those looking for a positive, it is a reminder that anything is possible in life irrespective of one’s level of intelligence!

The second press moment that left me speechless last week was Donald Trump’s interview with FOX Business Correspondent Maria Bartiromo. To her excitement Trump recounted the moment when he told China’s President Xi Jinping that he had just launched 59 missiles into Syria, which will forever be remembered as the chocolate cake story!

“We had the most beautiful piece of chocolate cake you have ever seen and President Xi was enjoying it….Mr President, let me explain something to you. This was during desert. We have just fired 59 missiles…we have just launched 59 missiles headed to Iraq…..yes Syria (after prompt)”

Donald Trump tells an excited Mario Bartiromo about the moment he informed the Chinese President of the missile strike on Syria, over a beautiful piece of chocolate cake

The ramblings of Donald Trump are another reminder of how deluded he is and the more the Presidential power goes to his head the more the world needs to worry. Trump has learned quickly that for a US President wanting to portray power in the eyes of the American people, the easiest port of call is to display military might.

Yet what I found even more disturbing from the video was how Maria Bartiroma fawned over the President, her excitement about the US bombing Syria with “unmanned missiles” (imagine, missiles are now unmanned!) and most of all her look of sheer anticipation when asking how the Chinese President reacted (Go to 1:56 on the video). All that is missing from the interview is for Bartiroma to break out the poms poms!

Still, time spent worrying about Donald Trump, his cheerleaders and the other lunatics in charge of many of the countries across the world is largely pointless. You are better served by listening to Louis Armstrong! Happy Easter.

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Ronnie Moran: the last of the boot room boys

Posted on March 27, 2017 by VMcCarthy

‘The Boot Room Boys’ – Bill Shankly, Bob Paisley, Joe Fagan, Ronnie Moran, Reuben Bennett & Tom Saunders at Melwood

Bill Shankly is famous for saying that “Some people think football is a matter of life and death. I assure you, it’s much more serious than that”. Well one man that gave his life to Liverpool Football Club is Ronnie Moran, who sadly passed away last week at the age of 83.

Perhaps unrivalled in football, the man known as ‘Mr. Liverpool’ gave 49 years to Liverpool football club, as a player, coach, physio, reserve-team coach, assistant manager and caretaker manager. The outpouring of tributes from former Liverpool players highlights the contribution he made to the club. Continue reading →

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Warren Buffett’s recommendation: choose passive

Posted on March 6, 2017 by VMcCarthy

Warren Buffett shares his recommendation to investors

In the world of investment management one of the most revered active investment managers is Warren Buffett. Known as the “Oracle of Omaha”, Buffett has delivered considerable returns for his Berkshire Hathaway shareholders over the last 52 years. When Buffett speaks people listen. Continue reading →

Posted in Active Management, Decision Making, Education, Equity Markets, Passive Management, Risk, Thoughts, Valuation | Comments Off

Short-termism, love and acting with class

Posted on February 27, 2017 by VMcCarthy

Last week, the football world provided us with yet another example of short-termism. Claudio Ranieri was sacked as manager of Leicester City, less than a year after winning the Premier League.

Of course, no manager is safe these days but Ranieri achieved the impossible dream with a team bookies rated as 5000-1 to win the league at the start of the 2015/2016 season. He pulled off a miracle, there is no other way to describe it. Continue reading →

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