Leadership is more than an abstract quality to Stuart Davidson. It’s a reason to invest. And Mr. Davidson does a lot of investing — both for profit and for the common good.
His “day job,” as he calls it, sees him working as a managing partner of Labrador Ventures (its portfolio includes the personalized Internet radio service, Pandora, and the leading live interactive broadcast platform, Ustream).
His other calling is as a remarkably creative venture philanthropist, giving his time, money and talents to promising nonprofits and social enterprises.
For Mr. Davidson, a trustee of the Woodcock Family Foundation, “leadership is so important it trumps all other attributes” when it comes to potential impact on an organization. In fact, Mr. Davidson points out that Woodcock’s philanthropic strategy — it supports social enterprises seeking systemic change — often turns on finding “unusually able and innovative individuals.”
Acumen Fund is one example of the strategy in action. Acumen combines traditional philanthropic motives with market-based strategies, investing in early stage enterprises serving low-income populations around the world. It invests in areas like health care and alternative energy-expecting both a social and a financial return. Any “profit” is put into a new investment. Since it began in 2001, Acumen has made a total of $88 million in investments in 82 enterprises, helping more than 100 million people, according to Wikipedia.
Mr. Davidson and Woodcock have supported Acumen from the beginning — he’s a current board member — and he says the organization took off because of its founder and leader.
“Acumen needed someone who understood the issues of the developing world, who was ready to take a leap, who felt like her purpose in life was to achieve these goals and had the skills,” he says. “We found all those ingredients in Jacqueline Novogratz.”
Ms. Novogratz’s success has not been limited to Acumen. She serves on the Aspen Institute board and the board of IDEO.org, and is a member of the Council on Foreign Relations.
So what makes a good leader? Mr. Davidson says communication, management skills and the ability to deal with conflict are all important. But commitment and motivation stand out.
“Some people come to Labrador Ventures and just show me how much money they will make for us,” he says. “I often don’t take a second meeting.” If their main motivation is making money, he reasons, then they will go do something else “when they hit the first bump in the road.” He believes a good leader is totally committed to a project and won’t rest until he or she gets the job done.
He also has some advice for his fellow philanthropists as they evaluate their gifts and impact investments.
“Bet the jockey, not the horse,” he says. “That’s another way of saying the person is more important than the concept of social change.” His experience — both as a venture capitalist and a venture philanthropist — has taught him that it’s easier to change the mission of an organization than to change its culture and leadership.
“If the leadership is right,” he says, “they will figure out what to do. Go with leadership.”
Click here for more information from Investing in Leadership, a guide I wrote for the nonprofit Rockefeller Philanthropy Advisors.
— Author and writer Steven Crandell helps integrate story and strategy for organizations, with nonprofit foundations a particular focus. “Thinking Philanthropy” aims to provide practical, thought-provoking ideas about giving. This article was cross-posted on Tumblr. Steven can be contacted at stevencrandell@noozhawk.com, or follow him on Twitter: @stevencrandell. Click here for previous columns. The opinions expressed are his own.