Instead Of Treating Society’s Challenges, Bobby Turner Wants A Cure by [email protected]

Turner Impact Capital CEO Bobby Turner discusses his efforts to cure society’s challenges.

Bobby Turner, principal and CEO of Turner Impact Capital, describes himself as an “evolving capitalist.” After achieving tremendous success as chairman and CEO of Canyon Capital Realty Advisors, Turner took the considerable skills and knowledge amassed in his career to create a business that tackles some of society’s most pressing problems. As he explains to Katherine Klein, vice dean for social impact at Wharton, doing good isn’t just the domain of philanthropists. Through impact investing, it is possible to turn a profit, satisfy stakeholders and raise up a community all at the same time.

An edited transcript of the conversation appears below.

Q&A with Bobby Turner

Katherine Klein: Twenty-five years ago, you were a co-founding partner and CEO of Canyon Capital Realty Advisors. You stayed with the firm for many years, but about two years ago, you founded Turner Impact Capital. What’s different, other than assets under management?

Bobby Turner: What’s different is the opportunity to spend 100% of my time and energies focused on something that I’m fanatical about. For the vast majority of my career, I was both a capitalist and a philanthropist, and I struggled at both. As a capitalist, I was a partner in one of the world’s largest hedge funds for 25 years of my life. I created great wealth. But the sense of accomplishment was parallel to the amount of wealth that I had created. So, I really struggled at making my change meaningful. As a philanthropist, I struggled at making meaningful change. I had given millions of dollars away of my time and my energy and my money, only to put Band-Aids on treating some of society’s most daunting challenges. I realized in many instances, I was treating, not curing. And I was actually creating and funding a legacy of dependency.

It was only about 15 years ago, with the help of my wife, that I evolved. I evolved from a capitalist, whose sole metric of success was just making money, to one that could also superimpose the impact on the stakeholder community at large….

Katherine Klein: What changed, and what was your wife’s influence?

Bobby Turner: My wife is a very good barometer on everything real and authentic. Many years ago, she looked around at the community and said she wanted to purge a number of relationships that we had. I asked why, and she said she didn’t think that these families were actually rooting for our success. I think it takes that kind of wisdom that my wife has to help me oftentimes put my trajectory back on the right course. It’s not always about the destination in life, it’s also about the journey. And my wife’s a very good journeywoman. I’m a good destination guy, but she balances me with the importance of the journey.

“As a philanthropist, I struggled at making meaningful change. I had given millions of dollars away of my time and my energy and my money, only to put Band-Aids on treating some of society’s most daunting challenges. I realized in many instances, I was treating, not curing. And I was actually creating and funding a legacy of dependency.”

We were always interested in philanthropy. She recognized my frustration with philanthropy. It was her suggestion, if you could take the acumen and the prowess that you had as a capital investor and apply that — your profit-driven mission to the purpose-driven mission — you probably could scale and create sustainable solutions to the issues that are so near and dear to you.

Katherine Klein: Then the light bulb went off and you thought, “I can invest in charter school facilities, and I will have substantially greater impact through an investment practice.”

Bobby Turner: Most people tend to bask in their glories; I tend to dwell on my failures. Over a seven-year period, as a not-for-profit, I was very actively involved in an organization where, with the help of Bill and Melinda Gates and Eli Broad, we built 38 public charter schools in probably some of the most economically challenged neighborhoods of Los Angeles. Fifteen thousand school seats. The problem was that for each of those school seats, there were three kids on the waitlist. Nearly 45,000 kids were on that waitlist. I concluded, once again, that what I was doing with the Pacific Charter School Development Corporation, the not-for-profit, is we were treating. We were trying to address. We were being reactive. And the reality was, if you want to treat, then [do so with] philanthropy and government. But if you want to cure, you have to harness market forces to create a sustainable solution.?Twitter  That means making a profit, and there’s nothing wrong with that. The fact is, you can drive better risk-adjusted returns by being purposeful because the realities are that we’re not speculating on demand, we’re just fulfilling the existing demand where the traditional investor in the space has been the government or philanthropy.

Katherine Klein: You partnered with tennis great Andre Agassi to create the Turner-Agassi Charter School Facilities Fund. Tell us a little bit about when the light bulb went off and the stepping stones to “there’s a better way than philanthropy.”

Bobby Turner: I made a cold call to Andre. I like to think of it as a warm call. But I had read his book, and I realized that he and I shared the same passion and frustration for public charter schools. He, as a philanthropist, had built his own K-12 public charter school in one of the most underserved, economically challenged neighborhoods of Las Vegas. Andre was an eighth-grade dropout. He always likes to say that his two most difficult years of high school were eighth grade. But he felt that his responsibility was to give back to those who had the capabilities to succeed if they had the opportunity to complete school. By the time I had met Andre, he had built his K-12 public charter school called the Andre Agassi College Preparatory Academy. He had two graduating classes. A hundred percent of those kids had graduated and gone on to college. His frustration was, while he was educating 1,000 kids at a school, there were 3,000 kids on the waitlist. I called Andre and floated him what he thought was a very novel idea: Let’s take our mission-driven organization, let’s make it for-profit so that we can scale it, create a sustainable solution.

His initial response was great skepticism. He thought that it would be hypocritical of him, as a philanthropist, to make money off his philanthropy. But it was very easy to impress upon him the very simple fact that over the prior 15 years, Andre had raised $175 million in philanthropy to build and operate his school. What he had to show for that $175 million was one school, 1,000 kids in his school and no money in the bank. I said to Andre, “If we were to take the same $175 million and use my business model, in one-fifth of the time, we could have built 50 schools, 25,000 school seats, returned the capital

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