SEASON 1 EPISODE 8 with

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What do Tesla, Lululemon, and Waste Management have in Common? A Conversation with Swell Investing’s Teresa Orsolini Season 1, Episode 8

Guest: Teresa Orsolini, Chief Marketing Officer of Swell Investing

AARON KWITTKEN Hey, it’s Aaron. Swell Investing is my next guest. And since we’ve recorded this podcast, unfortunately, they have announced that they’re going out of business at the end of August. But I decided that the podcast is so good, the messages are so potent. And our guest, Teresa Orsolini, I have no idea what her future employment plans are, but she should be employed, cause she’s amazing, doing amazing things. I thought that we should still let you listen to this podcast.

AARON KWITTKEN Broadcasting from the 10 Hudson Square Building, home of WNYC Radio in Soho, New York, welcome to Brand on Purpose, the podcast dedicated to uncovering the untold stories behind the most impactful purpose-driven companies.

My guest today is Teresa Orsolini, Chief Marketing Officer of Swell Investing, the impact investment company that guarantees that your dollars go to socially responsible businesses. I was particularly interested in Swell because it joins the likes of Betterment and Acorns, in what has recently been cited as about a $30 trillion dollar industry when it comes to social impact investing. And there’s a lot of stats and facts out there that say that these social impact investing funds are outperforming traditional funds at this point.

Teresa, welcome to Brand on Purpose, it’s great to have you.

TERESA ORSOLINI Thank you so much for having me. I’m excited to talk to you this morning.

AK: So, you had this seemingly amazing career, working for P&G in brand management and in marketing. And before joining Swell about three-plus years ago or so, you were the Director of Brand Marketing at True Religion Jeans. Seems to me like a huge pivot to go from, and I’m not saying Swell’s not an amazing career otherwise I wouldn’t be talking to you, but it’s different, right?

And if you could talk a little bit about what that spark was how you got involved. Swell is only technically four years old, but I know there was a launch and then a relaunch, so talk a little bit about what made you interested in Swell. And, also, you didn’t just take, like, a small turn, you took a very hard left turn in your career. Thankfully you’re still young, you can do that, but you also have a lot of experience behind you, what was your thinking behind that?

TO: Yeah, it was a big pivot. So I’ll kind of take you back to the origins of what drove that change. So, my family’s from the Dominican Republic. My father’s 100% Dominican, I’m a halfie, but in the DR, clean water is a really precious resource. And growing up, we would brush our teeth with boiled water and cook with boiled water, and so I had, kind of, been familiar with that and that struggle globally, if you will.

Prior to joining Swell, as you mentioned, I was working just right before Swell, in the fashion industry at True Religion. And I went to the warehouse and saw firsthand how thousands of gallons of water were used to produce a single pair of jeans.

And I suppose I was traumatized by the excessive waste, and it really made an impact on me. And I kind of made the decision there and then to leak over to the other side, so to speak, and I made a career decision that said, “I need to align with my values and I want to work with companies that have the potential to change the world for the better.”

So that was actually kind of what drove the major pivot, but, yes, my career background had been with CPG where I had been with P&G for almost a decade, working across global and domestic brands, really great brands who were definitely purpose driven.

But the difference, for me, was wanting to work on a business and build a business from the beginning that had changing the world for the better at their core. And so it’s difficult to reengineer an existing business. It’s really difficult to, kind of, change a business model and so, I knew that if I wanted to work on a business model measured at global change, I needed to be at the very beginning of that.

AK: Is it, I mean investing, obviously you’re a very smart person, and I’m sure you picked that up very quickly. But, it’s a big change to go from CPG and fashion into investing. Did you have a background in finance? A background in investing? Were you a social impact investor yourself? Like, how hard was that leap and what did you do to educate yourself?

TO: It was a leap for sure. But I was always passionate about investing so I personally have, with my partner, have been kind of doing different real estate investments and building up communities that we really believe in. And so I’ve always been interested in it.

I had, kind of, seen the industry and, fintech specifically, kind of, grow up, but, actually, personally, as a marketer, I saw that there was a huge knowledge and education gap in how so many consumers were just not even in touch with their finances. And so I had to go to school for myself, like I literally met with my friends that were finance pros and I went to New York and met with different people that I could get smart in this space on.

But it was certainly a learning curve for me and I saw that there was this huge gap between knowing where my money was going and even how much money I had and how much money I needed to be investing or saving, and the everyday consumer.

AK: What was the scariest part outside of the learning, just taking that leap? I mean, I guess, it’s funny, when I started my own company, I remember saying to my wife, “Well if it doesn’t work out, I’m marginally employable.” I’ll always be in debt so it doesn’t really matter. And I could always find a job. And I’m just wondering if you had, kind of, a similar calculus right? Well, if it doesn’t work out at least you don’t have the regret of not trying, right?

TO: Yeah. For sure. I was kind of like ready to make this change. I’ll totally admit I hadn’t taken enough risks in my career, I think, and so this was the moment where I was like, let’s take, let’s do it. So, no regrets, no fears. Obviously, I had a partner that helped, who was somewhat stable, but I was ready to make that pivot and change and take a risk and put it all on the field.

AK: So, there are seven portfolios, right? So you’ve got Zero Waste, Disease Eradication, Clean Water, which you just talked about, Healthy Living, Green Tech, Renewable Energy and Impact 400 which is kind of a thematically balanced portfolio, right?

TO: Yep.

AK: I’m sure there’ll be more, as well. Did the seven come from, was the impetus for the seven come originally from the seventeen sustainable goals defined by the UN? Like, how did that come about? I know that clean water is what drew you in but obviously there’s more to it.

TO: For sure. So we, in the infancy when I started with Dave Fanger, our founder, we spent a lot of time with consumers trying to understand what mattered to them. And social and environmental challenges just kept surfacing, whether it’s clean water or water scarcity or growing landfill waste or healthcare. So, we would look at those different themes and then make sure that we could build a portfolio based on them because you have to have enough for-profit companies to actually comprise a portfolio.

And so, we started to then create these portfolio themes around areas that mattered to consumers. And we were pretty unapologetically selective about companies that we would put in our portfolio. Now, obviously, we have an investment management team that works on this but they would look at companies that were deriving their revenue because they were solving this challenge directly, whether it’s clean water, availability or infrastructure or desalination. Because, at the end of the day, money communicates priorities so, right? If you’re making money from solving that challenge, then you are clearly making it a priority, it’s part of your core business.

So, yeah, we do expect to see a meaningful percentage of our company’s revenue directly connected to solving challenges which are, in effect, simply said, part of the 17 sustainable development goals. So they have to be connected to at least 1 of the 17 goals, and that’s what, I think, makes Swell unique. It’s not just, like, a corporate initiative or PR stunt, but these companies, at their core, are solving a challenge and they’re making money from it. But it’s also a reason why we’ll never have firearms, oil or gas in our portfolios because that just does not connect into global progress.

AK: And I’ll never have firearms, oil, or gas on my show either. Just FYI.

TO: Bravo to you.

AK: I know this is probably before your time, but this is Swell 2.0, right? When it first launched, there was a reboot. Can you talk a little bit about that? I just think that it’s important for people to understand that not everything starts off as planned in life, but certainly in business, especially when you’re trying to be disruptive and do something new. But there’s some key learnings about maybe potentially partnering with the wrong companies relative to your mission and vision. And this is a reboot, but you guys also rebooted very quickly and very successfully.

TO: Yeah. We did. We had a pretty meaningful pivot and this is, I think, a great example to your point of when you realize something’s not working, you kinda have to make a core decision to veer left. So, when we first started out, Dave’s vision was to identify companies that were giving back and had really great corporate sustainability initiatives or were donating to various charities and organizations or NGOs.

And while consumers liked the idea of their money going towards good, they really called BS on it and said, this is green washing. These companies aren’t directly doing this. The bigger players will always have more money to give and, for them, it’s a very small percentage of their P&L.

AK: And, just to be clear, we’re talking about companies like Walmart, Goldman, Macy’s, right? And they give a lot, they do a lot. That doesn’t mean they’re not doing a lot to necessarily improve, or like you said, it’s not material to their P&L. So it’s a little bit different than the vision that you and Dave and others have set out for Swell.

TO: Exactly. So, yes, these are companies that have probably entire teams dedicated to their giving strategy. Their impact can be great because they’ve got a lot of skill and resources, but then we decided, what if we could actually find enough companies that were directly working to solve these challenges and that was a big question. We didn’t know what that universe looked like because it hasn’t been done on a retail level.

And so, finding those companies and setting up an infrastructure to evaluate those companies through a rule set that we have, has been part of the building of Swell in those first few months, post pivot. And we did find that there are companies out there that are doing this, that’s obviously how we’ve gotten to where we are now.

And it’s been really exciting to, kind of, learn what some of those companies are doing, whether it’s building solutions to desalination or water treatment systems so you can treat water and use it more effectively or infrastructure so that we can water our small crop farms better and we’re not wasting a ton of water. So, we’ve been really able to find these companies I think of them as gems to make enough to build up a portfolio.

AK: Talk a little bit about those rules, if you can, I don’t know if it’s on the website. You guys seem to be transparent about everything, but describe for me a little bit about what those rules are in order to vet these companies.

TO: One of the first things we look at is: are they linked into one of our impact themes. That’s important. Maybe, on the whole, on the surface, they are and maybe they’re not necessarily. But you can’t see that on the surface yet, you have to dig a little bit deeper.

Yes, G-rating is another really important part so environmental social governance and that’s effectively an industry term, but it is a measurement that is measured. It is something that we can go back to and see, what is their ESG literally their environmental social governance rating. Does it meet a certain criteria and we have a pretty high bar set on that.

There are different levels of ratings associated with ESG and then I think the last most important thing that really sets us apart is looking at a company’s revenue. So I kind of alluded to it, but if they’re driving a meaningful percentage of their revenue from solving that theme, then we’ll continue them for inclusion.

And there are companies that have made pivots in their business model or through acquisitions have made them not a fit for our criteria and so we do reevaluate them. We evaluate them every week, but we make decisions to change in the portfolios about every year, and seeing if there’s new ones that we want to include or there’s things that we want to exclude.

And what’s exciting is there’s new companies every day that are entering this universe. Beyond Meat, which just IPO’d, is a great example of an innovative company that is responding to health and climate change. And so they will definitely be something that we will evaluate for the next go around.

AK: I just had a Beyond Meat burger for the first time. I had my first meatless Monday ever in my life this past week.

TO: How did that go?

AK: Not bad, you know what’s interesting about that burger, not to digress too much, is that it actually kind of tastes like a burger. If I was a vegetarian, I probably wouldn’t like it because it kind of tastes like a burger, even though it’s not a burger.

TO: Yeah.

AK: But it’s cool and I love how they’re innovating and talk about an overnight success.

TO: Yeah, it’s good stuff. They’ve got a good distribution model which is the exciting part of them and their industry, where they’re maybe massifying what was maybe niche before, is now entering the meat lovers world.

AK: Right. Morningstar Farms is probably upset. They’re probably the ones, right? Because they’ve been in this business for a long time. So when companies get, for lack of a better expression, booted out of the portfolio, you probably don’t make a big deal of it. But, is that noted somewhere? Is that in an annual report? Is that on the site? Do you communicate that?

TO: We actually do. So transparency is a core value at Swell, both internally and externally, and we are so transparent that we will probably tell you more than many of your other investment companies might.

When we do a rebalance or reconstitutions, so, rebalance is when you weight the companies in your portfolios and then a reconstitution is when you decide to include or exclude certain companies in the portfolios. We communicate that out in these, like, snackable, fun, sometimes witty, hopefully, emails so people understand what’s going on and they can get excited about the companies that are entering their portfolios, and they can understand why we decided to move a company out.

Um, so we do do that biannually, in attached to the rebalance or the reconstitution so people are more aware of what’s going on because so often this happens. It’s a black box, a financial advisor will kind of make a decision and you have no idea what’s going on and we want people to know what they own. We kind of use this phrase of like know what you own. It’s really important that you know where your money’s going because you’re effectively giving a thumbs up to that company, and you’re giving them money to keep doing what they’re doing.

So we want people to be encouraged by where their money is going and also empowered to know when it’s not right, when it’s not consistent for their values or what we’ve set out as our wheel based set criteria, that they’re not going to be eligible to be included, and they don’t deserve your vote or your dollar, rather.

AK: So, is the rebalancing both performative and purposeful? So you’d be willing to kick a company out that might be performing well financially in your portfolio, but they no longer meet the criteria of the vision and the mission of Swell as it relates to impact.

TO: Exactly.

AK: That’s amazing. That’s amazing, unapologetic, I think that’s really, really impressive.

TO: One of the things that we touch on there is performance and there’s a misconception in the marketplace that if you invest in companies that are doing good, you have to sacrifice on returns. And that’s just not the case. And so, a lot of what we try to spend our time doing is educating people on performance and, over the past 25 years for example, and how what that has looked like for companies in the socially responsible space.

AK: One of the questions I have was, when I look at the likes of, and I think these are in your portfolio now, Unilever, Tesla, Lululemon, Merck, Waste Management. I also think you probably have consumers who are like, “Hmmm waste management. How are they making it into the portfolio?” So you probably have to create some narrative, as well, for your investors to explain what might be unexplainable just on the outside, because there’s so much more going on on the inside.

TO: Totally. I think that’s a great point. So exactly, education is one of the things that my team does and spends a lot of time on. So, yes, one of the sustainable development goals is clean water and sanitation and so Waste Management absolutely falls into that. Having clean cities and cities that can operate within certain health standards is important. So yes, there’s a lot of education that goes into that.

If you look at each of the companies, and if you dial down and you’re curious to search, we created company cards explaining what the company does, how it is linked in to the sustainable development goals, which of those 17 it touches on. And most of the time, many of our companies touch on several of the SDGs and then we give you examples of what that looks like in the world.

And then we relate different articles or stories that have been written that help affirm that so people understand what the connection is. It sometimes feels opaque so we do spend time investing, every single company on our portfolio page is included in that company card. So you have info that you’re armed with. Whether you’re getting challenged at a cocktail party or you’re just kind of curious for your own self so that you can be a better investor.

AK: How did you meet Dave Fanger, the founder and the CEO? How did that happen?

TO: Well, I was talking to different friends at start-ups ‘cause I kinda made that decision that I wanted to pivot and work at a company in its early stage. And I heard about Swell through IDEO, the design-thinking firm in SF.

AK: That’s an awesome firm. We do some work with them as well, with some shared clients. Amazing, yeah.

TO: Dave had just started conversations with them and was a team of one, him. And he was looking to bring on some smart folks, hopefully. And so he kind of tapped me to be the first employee to build the ground floor, what I like to call the ground floor.

So I heard about it through word of mouth and friends and IDEO and we kind of hit it off and quickly. He knew that we needed to hire more people cause we couldn’t possibly get it all done alone, but you know, a start up has to start somewhere and often times your ground floor of five or ten people have to wear a million hats and so we all did. We were kind of crammed in a small space in the middle of Santa Monica Carbon 5.

AK: Yeah, I can think of worse places to be though, let’s just be honest. Santa Monica is not- it doesn’t suck.

TO: It doesn’t suck, no. It’s pretty awesome. But our space was pretty cramped. We literally had, like, a, I don’t know, like, a 5x10 room. It was so small. We just, like, powered in there every day. It was like the war room.

AK: That’s exciting though, it’s really exciting.

TO: Yeah, it was. I mean you got to start somewhere and we were surrounded- I think one of the key things that set us apart from the beginning is, we surrounded ourselves with really, really smart people whether it was great engineer minds or great design minds to help us build this thing called Swell.

AK: So I noticed on the site that the IDEO thing is so interesting it kinda makes sense now to me cause I noticed on the site when it’s like, Meet our Team, you’ve got a lot of designers. And, I think, it’s interesting because I do agree with you, it’s part of education, it’s part of the aesthetic.

You’re talking to Gen Y and Millennials and I think they’re expectations are different and I think in some ways their standards are higher when it comes to engaging with them in very authentic, and like you said earlier, kind of wittier, more engaging ways. Which, I think, falls to you, right, in your role and working and intersecting with what you’re doing.

TO: Yeah. Definitely. So our product is our lifeblood. It is what fuels our entire experience. So we spend a lot of time thinking about our customer’s experience, our user experience.

And designers, product designers, engineers, product engineers, they really kind of understand all they’re going to experience a button or how they will understand what we’re saying and we try to make it really snackable, really simple, to the point where we get challenged by legal and compliance cause they want a little more detail or they want a ton of disclosures.

And we push back a lot and say no we have to make it so simple that we could explain it to a five-year old. That’s one of the bars we set as we’re designing our communication and our experience.

AK: Yeah, it definitely shows for sure. I mean, you guys are what, four years old? Maybe? Am I right?

TO: Yeah, I’ve been around for three years. We launched in May of 2017 so about two years to the public.

AK: And you’re going up against some pretty big, air quotes you can’t see it, established players like Betterment, which was once a start up. Acorn’s the same. What do you think separates from them? And how hard is it to go against them or is it not so hard because the category has been established and there’s credibility around it. Like I said before, this is like a 30 trillion dollar category and growing.

TO: Yeah. Definitely. So I think it’s fun to be the new guy in this space. It’s actually something where we’ve heard consumers are looking for a way to align their values more closely with their money. And so, yes, we definitely have investors that are investing in Betterment and investing at Robinhood and investing at Acorn’s, but they’re trying Swell out.

And the millennial generation is the ‘try before you buy’ generation. So what they’re doing is they’re putting some money in to see how it goes, to see how returns go, to see what the experience is, to see what happens. I think that that’s what were seeing right now. People want to try it out. They want to give their money, invest their money this way.

I think a lot about impact investing and the success of impact investing similar to the organic food industry or the electric car industry. So what organic and whole foods was 20 years ago, or what Tesla 20 years ago, now those are becoming mainstream. There’s adoption that’s global and/or across different sects, so I think we’re starting to see impact investing spreading out. It’s still in its infancy.

AK: Right, and you don’t have to commit to just one platform in the same way that the organic food industry or the automotive industry and the other ones you mentioned it’s the same thing, right? You could invest across platforms, right?

TO: Exactly. So impact investing we can touch multiple platforms and our hope is that people start to try us out and add more of their investable assets in through this method of investing. But at this point, yeah, certainly, we’ve got a lot of cross trial going on.

AK: And do you consider yourselves part of the fintech space?

TO: Yeah, for sure. It’s interesting cause we’re impact investing we’re in tech, but we’re definitely in the fintech space.

AK: Right. because I have to imagine, without you disclosing any trade secrets, that there’s a lot of technology, AI, which is an overused term of course, but maybe machine learning that goes into the company, into the business model, right? In how you’re making decisions and how you’re pushing stuff out.

TO: Yep.

AK: And, how much of your investment goes into that versus other parts of the company?

TO: It comprises an enormous amount of our budget, I think that we always look through the lens of the digital experience and how AI can fuel that. Or even our impact efforts and how AI can fuel that. So it is absolutely the future and there’s no way getting around it. It will make all of us better, smarter, more efficient, it will probably get rid of my job eventually.

AK: I hope not. I think there’s something to be said for instinct and experience backed by really good performative data, but I still think we need both.

TO: Yeah, yeah. But you certainly can make better decisions and you can rely more on that instinct and allow other machines to do some of the data-digging. It’s a huge part of what we do, whether it’s looking at the companies and evaluating them, and keeping tabs on them, to creating a custom experience for you as an investor. It is threaded throughout our entire organization and infrastructure.

AK: Have you run across a couple of companies, maybe you can share a few stories, companies that even surprised you? Or they were doing so much but it’s an almost untold story.

And maybe because they are humble, or maybe because their PR or marketing resources were devoted towards more of their commercial portfolio versus talking about ESG, which I talk to investors about, and what not.

Are there any examples that would come to mind that surprise and delight us ‘cause we would just be surprised or shocked because the story just hasn’t been told?

TO: Yeah, there are so many gems. I love learning about our companies. And one of the things we started doing is company spotlights, and they’re these really fun stop motion videos that show what the company does and it breaks it down in simple human terms.

So there’s this one company called Darling Ingredients that’s really exciting to me. And they take basically all the stuff you would throw out and they recycle it and make really useful stuff out of it. And you think about how landfill waste is growing year after year, and we’re really struggling to massify and scale recycling. We’re not doing it well in this country. And they have made an entire business out of it. And they create some really innovative, fun things.

So those are companies that I’m so inspired by because their entire business is built on the back of waste and recycling and reusing. So I think that’s, like, a cool example of these little gems that you find out about. It’s not such a little company but, it is, it is a novel concept to build an entire business around that.

AK: I mean, I’m on their website now. They are over a hundred years old. I’ve never heard of them.

TO: Never, yeah.

AK: They also have a puppy on their website, on their splash page so they got me there.

TO: Yeah, exactly, they’re a really fun company. And so we work to surface those. And we just launched our app a few weeks ago, so through push notifications, we can give you those CNN bite-sized intel around what the company’s doing, or an acquisition they made, or a product they launched or earning reports.

Snackable insights that help you be more connected to the companies because when you learn about them, you feel bought in, you feel like you’re part of that journey. And right now, there’s a huge disconnect between, think about your 401, Aaron. I wonder if you could name the top three holdings in your 401k. Most people can’t, maybe you can.

AK: I’d probably cry if I knew what they were because they’re probably companies that ethically and morally I don’t support.

TO: Yeah. So we’re trying to bridge that gap between where your money is going, the companies you’re supporting and ultimately the impact you’re part of.

AK: Is there an enterprise play, then? Just cause you mentioned 401k and it’s kind of interesting, right? Because yes, as a consumer, I can sign up for your app and I can use this as an investing platform, but I have no control over what T. Rowe Price does. In fact, I’m clicking boxes based on the fact that I’m about to be 50 quite soon, and that’s how my portfolios being balanced. It’s not being balanced with an eye towards impact.

TO: Completely, so what’s interesting about Millennials is most of them, by the time they’re, say, 35, have had at least three jobs. And three 401k’s. And so what happens to those 401k’s is they’re orphaned. And so what we have realized is yes, you may not have a decision in your current employer, but once you leave that employer, you’re able to kind of move that money out.

And so we offer IRAs. We have several different types of IRAs, and we help you roll that over so you can actually invest your money in the portfolios we offer, but with a retirement backing.

AK: I’m going to guess, though, you are not a Gen X, like me. You are a millennial, but maybe not like a brand spanking new millennial.

TO: I’m not a brand spanking new millennial, but I’m in the index.

AK: Someone in my office the other day said to me, she said that she was born in 1997, she was like, “Yes! I just made the millennial cut,” and I’m like, “Holy shit! I’m like 23 years older than you.”

TO: Yeah. Yeah. It is funny whenever I hear the 90’s that’s when I start to feel really old. Someone’s like, I was born in the 90’s! And I’m like, oh my god!

AK: Yeah. Yeah, you and me both. Listen, Teresa, it was awesome having you on, I really appreciate it. Just let our listeners know what is the best way to find Swell and maybe even follow you, and also the app, which I think you said earlier just launched.

TO: Yep. So, we’re at SwellInvesting.com. We are also really active on our social pages so if you’re a fan of Instagram, which I hope you are, Aaron, we’re really active in communicating what’s going on in the world, related to impact investing. So follow us on Instagram! Follow us on Twitter!

AK: I am on Instagram, I’m proud to say I have just over 1,000 followers, real followers and my 15-year old daughter said that that’s pretty cool for a dad. So I’ll take it.

TO: That’s pretty amazing, yeah, in general. I applaud you. I don’t have that many.

AK: Thanks again.

TO: Thanks, Aaron.